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Christopher Lewis
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USD/JPY

The US dollar has gone back and forth during the course of the trading session on Thursday as it looks like gravity is finally starting to take hold of this pair. Quite frankly, even if you told me that the next couple of days were going to be negative, I would not be a seller. I would simply wait for a nice opportunity to start buying on the dips, perhaps looking for stability near that bullish flag that formed near the ¥109 level.

USD/JPY Video 02.04.21

One of the biggest drivers of this pair is going to be the 10 year yield, and of course the differential between the United States and Japan when it comes those yields. With that being the case, I am looking for a dip over the next couple of days that I can take advantage of. The ¥111 level above has been resistance in the past, but when you look at this chart it is almost impossible to suggest that it is anything other than overbought at this point.

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Quite frankly, I am a bit stunned that we have gone this far in such a short amount of time, but it shows the herd mentality at work in full force. That could be why we break down rather quickly on some type of event, because a lot of people will be looking to book profits after such a huge move to the upside. That being said though, it certainly looks as if the market is one that you can be a buyer of that more of a valuable price at lower levels.

For a look at all of today’s economic events, check out our economic calendar.

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