US Dollar vs Japanese Yen Technical Analysis
The US dollar has plunged against the Japanese yen during the trading session on Thursday, as the CPI numbers came out much lower than anticipated. That being said, I think you’ve got a situation where the market still has a major interest rate differential between the two currencies, and I think a lot of people will be paying close attention to that. With that being the case, I think you have to be cautious about shorting this pair. And I do think that eventually we will get a little bit of a bounce.
After all, it’s still paying you to hang on to this pair at the end of the day, but we may get a little bit of a pullback. And that’s probably something that’s been needed for a while anyway. It’s an ugly candlestick now, but keep in mind I’m recording this video literally half an hour after the announcement came out.
So, we’re still in the panic phase. Longer term, we are still very much in an uptrend. And those who are patient will probably find a strong buying opportunity to take advantage of the Japanese yen being so weak. After all, the Japanese economy is buried in debt, and the Bank of Japan cannot cut rates significantly, at least not in the short term, due to the fact that they simply cannot finance all of that debt at higher rates. So, I think you do have a situation where traders will continue to look for value, but you may have to step out of the way for a little bit here.
For a look at all of today’s economic events, check out our economic calendar.
This article was originally posted on FX Empire
