US Dollar Continues to Grind Higher Against Japanese Yen
The US dollar has rallied a bit during the trading session on Wednesday to try to break towards the ¥116 level. Above there, the ¥116.33 level is an area where we have formed a bit of a “double top”, which is of course a very negative look. However, if we break above there then it becomes extraordinarily positive as we would blow through a significant amount of resistance. At this point, the market looks as if it is going to try to make that happen, but it is going to take a significant amount of effort.
USD/JPY Video 10.03.22
In the near term, I would anticipate that there is a lot of support underneath near the 50 Day EMA, which sits at the ¥115 level. All things being equal, I believe that any pullback will end up being a buying opportunity. The ¥115 level is a large, round, psychologically significant figure that people will pay attention to and therefore I would anticipate a little bit of support from there as well. If we do break down below that level, then it is likely that we go looking towards the ¥114 level, another area that has seen a lot of support.
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Keep in mind that the market is sometimes influenced by risk appetite, but the main driver at this point is probably going to be the interest rate differential between the two countries. The interest rates in the United States are much higher than the interest rates as defined in Japan. As long as that is going to be the case, the US dollar will be much more attractive.
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