Technical Analysis US Dollar vs Japanese Yen
The US dollar rose against the Japanese yen during trading on Tuesday as US retail sales figures came in stronger than expected, suggesting that inflation is lingering and the Federal Reserve may need to tighten its monetary policy further.
Anyway, it doesn’t really matter because the Japanese yen itself is toxic. We formed a hammer on the 50-day EMA during the trading session on Monday, and now it looks like we’re going to see some kind of recovery. I think we’ll eventually try to get back to the ¥160 level, but it might take a while.
Short term pullbacks should become buying opportunities as the interest rate differential continues to pay you out at the end of each session. However, make sure you get paid out at the end of each session. Several brokers have stopped paying swaps in this pair as it is being debited from their accounts. So you need to be very careful who you decide to trade with.
But the pair is ultimately going to be driven by institutions that do swap, because they just do their large amount of business somewhere else in that environment. Even if we were to break through here, the ¥155 level below that is a huge support level. So you have to be careful with that as well. I just think that invites more buying. The idea of buying the Japanese yen against almost every currency in the world right now is untenable.
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This article was originally posted on FX Empire
