US Dollar vs Japanese Yen Technical Analysis
The US dollar initially pulled back just a bit against the Japanese yen during Wednesday but it’s probably worth noting that we are in an area that previously has been defended somewhat vigorously by the Bank of Japan. Furthermore, you also have to keep in mind that short-term pullbacks will continue to attract a lot of buying pressure due to the fact that we have such a wide interest rate differential between the two currencies. After all, you get paid to hang on to this pair. Wednesday is a little bit of a different situation due to the fact that it was Juneteenth in the United States and therefore New York really wasn’t in the picture.
On a drop from here, I see plenty of support, especially near the 50 day EMA and of course the 155 yen level. On the other hand, if we turn around and break above the highs of the last couple of days, I do think that we will eventually grind towards the 160 yen level. The 160 yen level, of course, is basically where the Bank of Japan said no more and jumped in and pushed things down, at least temporarily.
I do think eventually we not only challenge that level, but also that we continue to go much higher. Short-term pullbacks, I think, continue to offer plenty of value, and I do think they continue to see a lot of value hunting and traders are just willing to step in and pick this market up. After all, if you choose to short the pair, you have to pay at the end of the day for the privilege of trying to fight what is obviously a very strong uptrend.
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This article was originally posted on FX Empire
