US dollar continues to be major focus for traders worldwide, as the war drags on.
The US dollar did try to rally against the Japanese yen early during the session on Tuesday, but the 160-yen level continues to be a major area of contention. I do think that the Bank of Japan is sooner or later probably going to lose its sense of humor, and I suspect that the rest of the market is worried about that as well.
So, with that being the case, it does make a certain amount of sense that we would see market participants hesitant in pushing the US dollar above that level. That being said, if we can break above the 160.4 level then I think we’ve got a huge move to the upside coming.
The US dollar finds itself banging against the 1.3950 level versus the Canadian dollar. This is an area that’s been important multiple times in the past, so it would not surprise me at all to see it offers a bit of resistance here.
But I do think ultimately, we have a situation where the interest rate differential will continue to favor the US dollar going forward. I think at this point any pullback ends up being a nice buying opportunity. I do not want to short this pair, but I do recognize that at this point in time, we are a little overextended, and that is something that you simply cannot ignore.
The US dollar is testing the 200-day EMA against the Swiss franc, and we are right on the verge of some type of big breakout. The Swiss National Bank is definitely a dovish national bank, and they have threatened to intervene more than once.
Furthermore, the interest rate differential is wide enough you can drive a truck through it, so it does make sense that this eventually goes higher. The question is, can we go through there right now? That, I don’t know, but I think eventually the levee breaks, and we go much higher given enough time. I have no interest in shorting this pair, any pullback at this point in time I think will end up opening up a potential buying opportunity for those who are patient enough.
Chris is a proprietary trader with more than 20 years of experience across various markets, including currencies, indices and commodities. As a senior analyst at FXEmpire since the website’s early days, he offers readers advanced market perspectives to navigate today’s financial landscape with confidence.