US Dollar Continues to Power Higher

US Dollar vs Japanese Yen Technical Analysis

The US dollar has pulled back just a bit during the trading session on Tuesday to reach the ¥122.50 level before bouncing again. At this point, the market looks as if it is trying to consolidate its way into the next move, as we do not know exactly what is going on at the moment. The market continues to be very noisy, quite frankly more likely than not due to the fact that we have seen a massive amount of resistance previously at the ¥125 level on the longer-term charts. Because of this, the market is more likely than not going to be stubborn at this point, and if we can break above the ¥125 level, things could get rather explosive.

The ¥121.50 level is an area that has been short-term support. If we were to break down below that level, then the market is likely to go looking to reach the ¥120 level underneath, which is a major round figure and an area that will attract a lot of attention. The 50 Day EMA currently is racing toward that area, and therefore I think we could set up for a big battle in that general vicinity. Anything below there probably breaks the entire trend completely.

Keep in mind that the interest rate differential continues to favor the US dollar quite drastically, so that will be something worth paying close attention to, as it has been such a major driver of what has happened over the last several weeks. Yes, we are a bit overdone at this point, so a pullback makes quite a bit of sense. Whether or not we get it will be a completely different question, to say the least.

USD/JPY Technical Analysis Video 06.04.22

For a look at all of today’s economic events, check out our economic calendar.