US Dollar vs Japanese Yen Technical Analysis
The U.S. dollar initially pulled back just a bit during the trading session on Thursday, but then turned around to show signs of life again. All things being equal, this is a market that I think continues to see a lot of noisy behavior, but I also believe it is a huge buy on the dip type of situation.
All things being equal, it looks like we are forming a little bit of an ascending triangle, and that makes a lot of sense. As the ¥152 level above continues to offer a massive barrier, with the jobs number coming on Friday. That might be what kicks us over this line. If it doesn’t, then I will be looking for some type of pullback to take advantage of, perhaps all the way down to the ¥150 level.
Either way, I think this is a situation where the markets just continue to play the interest rate differential as the market is definitely looking at the interest rate differential between the United States and Japan as a way to get paid at the end of every day. In fact, I own this pair and get paid at the end of every day and will continue to do so unless central banks change their monetary policy.
At this point in time, I think ¥150 is a short term flaw, especially as the 50 day EMA is starting to approach that level. Given enough time, I do think this market goes looking to the ¥155 level. While it could take a bit, the reality is that we have plenty of buyers out there willing to collect swap in this pair.
For a look at all of today’s economic events, check out our economic calendar.