The US dollar has rallied significantly during the trading week against the Japanese yen, only to turn around and show signs of negativity.
The US dollar has rallied significantly during the course of the trading week, only to give up gains rather quickly, as we are now below the ¥150 level again. We ended up forming a bit of a shooting star, and if we can break down below the bottom of the candlestick, then we could go down to the ¥147.80 level. All things being equal, we are in a massive resistance barrier at the top of this candlestick, so if we were to blow through there, it would be extraordinarily bullish. That being said, the market is probably a little overstretched so I think a little bit of a pullback could make a certain amount of sense.
I suspect at this point there will be an outsized amount of attention paid to the bond markets, as the interest rates will continue to be a major driver of where we go overall. The interest rate differential continues to favor the US dollar, so I think it’s probably only a matter of time before we see the market rally again, but we have been so bullish for so long that a little bit of consolidation makes quite a bit of sense. In fact, when you look at the last 5 weeks or so, it has essentially gone nowhere.
If we were to break down below the ¥147.80 level, then it’s possible that we could go down to the ¥145 level. On the other hand, if we were to break above the 152 union level, the market is likely to continue going to the ¥145 level above. I think eventually that’s what happens, but right now volatility continues to be an issue.
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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.