The US dollar has initially gone higher during the day on Wednesday, but then turned around to find support underneath as we await the results of the Federal Reserve meeting. While an interest rate hike is not expected, we have seen a very impulsive move to the upside, so it looks like the buyers are willing to come in. A lot of this will come down to risk appetite and of course the value of the US dollar in general, so I have to anticipate that this interest rate differential will continue to favor the upside in this market. However, I also recognize that if the Federal Reserve disappoints in some way, we could see a complete turnaround and a reach towards the ¥111 level.
From a technical analysis perspective, this market certainly looks as if it is trying to go higher, and it makes more sense that we go towards the ¥112.50 level, and then eventually the ¥113 level. If we can break above ¥113, then the market is ready to go much higher, perhaps reaching towards the ¥115 level. In general, I think a pullback will probably only offer value, but you need to be patient about jumping into the market on pullbacks. In general, I believe that the market will be noisy, but be watched very closely by traders looking to pick up the US dollar “on the cheap” if we get that pullback that I hope we see.