The US dollar initially pulled back a bit during the trading session against the yen on Tuesday but found buyers yet again as we continue to see a lot of momentum.
The US dollar initially pulled back a bit against the Japanese yen during the trading session on Tuesday but continues to find buyers every time we pull back. At this point, it looks as if we are going to continue to see interest in this market, and it is probably only a matter of time before we see this market continue to go much higher, perhaps breaking out to the upside. The ¥137.50 level is an area where we have seen a lot of resistance in the past, so it should have plenty of market memory and that area.
If we can break above that level, then the ¥140 level would be the next major target, followed by the ¥142.50 level as well. On the other hand, the market seems to have quite a bit of support at the ¥135 level, so I think that your short-term floor in the market. The 50-Day EMA is getting ready to cross above the 200-Day EMA, forming the so-called “golden cross.” This obviously is a very bullish sign, and therefore a lot of longer-term traders will be looking at this through the prism of a potential longer-term “buy-and-hold” signal.
Remember that the Bank of Japan will continue to have to flood the market with yen, as they are buying unlimited bonds to keep interest rates down to 50 basis points on the 10 year JGB. As long as that is going to be the case, it’s very unlikely that the Japanese yen will be able to strengthen over the longer term.
By default, the US dollar should continue to see upward momentum, which is even more so likely now that we have the Federal Reserve suggesting a “tighter for longer” monetary policy. As long as that is going to be the case, then it’s very likely that this pair will continue to go to the upside. I have no interest in shortening this pair anytime soon, because of not only the central bank actions, but the technical analysis both tell me that this pair should continue to go higher in the near term.
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Chris is a proprietary trader with more than 20 years of experience across various markets, including currencies, indices and commodities. As a senior analyst at FXEmpire since the website’s early days, he offers readers advanced market perspectives to navigate today’s financial landscape with confidence.