The US dollar continued to show resilience to kick off the week, reaching towards the ¥114 level, and I think that we still have about another ¥50 to go before we run into major resistance. However, we are a bit overstretched so I suggest looking for value.
The US dollar rallied slightly during the day on Monday, but then sat a bit still. Perhaps it is a bit exhausted, as we have been so bullish as of late. Nonetheless, I do like buying dips and I don’t have any interest in shorting this pair. I think there is support at ¥113.50, and of course the ¥113 level. I believe the buyers will come in based upon value and will eventually try to break above the psychologically important ¥114.50 level, which is the gateway to much higher pricing.
Looking at this chart, it’s obvious that we are in and uptrend, but I don’t have any interest in trying to get cute and short this pair. I think that the interest rate differential has long been established, but recently the Federal Reserve has reasserted it. With that in mind, it makes sense that we continue to see a lot of volatility, but most certainly with an upward slant. With that in mind, it’s a fool’s game to try to short this market. It’s not until we break below the ¥112.50 level that I would even be remotely interested in doing so. I do believe that we will eventually break above the ¥114.50 level, but it will probably be a bit difficult to accomplish. It may take several attempts, and therefore I look at this more as a longer-term trade than anything else. Look for value, and then take advantage of it as we dip.
Being FXEmpire’s analyst since the early days of the website, Chris has over 20 years of experience across various markets and assets – currencies, indices, and commodities. He is a proprietary trader as well trading institutional accounts.