USD/JPY Price Forecast – US dollar continues to show resilienceThe 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.