US Dollar vs Japanese Yen Weekly Technical Analysis
The US dollar initially retreated this week but is now showing signs of life. I think you still find plenty of buyers below the ¥155 level, which is why value hunters are coming in and taking advantage of that interest rate differential. Remember, you get paid to hold this trade at the end of each session, so it makes more sense to own it than to short the market and pay for the privilege of doing so.
That said, the market is certainly one that looks set to continue moving higher in the longer term. But I also recognize that it’s going to be a pretty important battle. With this I think you have a scenario where you buy the dips and perhaps hold on to what could ultimately be a much bigger move.
I think the ¥160 level is very possible, and if we break above that, the next wave would come higher. We had previously formed a huge ascending triangle and we came back to test that. And now it looks like we’re trying to fight our way up. I think the key, of course, will be that it’s more of a fight.
We may not take these impulsive steps just because there is a possibility that the Bank of Japan may become involved. It’s not that they can change the trend, it’s just that they can slow it down. And that is essentially what you are working with.
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This article was originally posted on FX Empire
