Technical Analysis US Dollar vs Japanese Yen
The US dollar has fallen slightly during the trading session here on Thursday as the Americans were away for Independence Day. That said, I am not reading too much into this candlestick as we also have Non-farm Payroll on Friday, which of course has a big impact on what happens in the currency markets. We are a bit overextended at this point, so I think a pullback is probably necessary. And that pullback will probably be a situation where we need to pay attention to the 160 yen level.
The 160 yen level was where the Bank of Japan intervened earlier and therefore it should have some market memory now that we have broken above it. That said, if you look at this chart it is easy to see that we are overbought, at least in the short term. So, a small surprise during the trading session on Friday could come and that is actually a good thing.
I want to buy dips. I have no interest in shorting this pair because the interest rate differential will still give you a nice amount of money at the end of each session. I don’t care if the Federal Reserve cuts rates again later this year. It’s still a huge interest rate differential and unless the Federal Reserve cuts aggressively, the Japanese Yen doesn’t have much to offer you. The Bank of Japan certainly can’t cut rates anytime soon and with the massive amount of debt in that country I don’t think they’ll ever be able to raise rates. So with all that said, I think you’re just going to see more of the same going forward.
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This article was originally posted on FX Empire
