US Dollar vs Japanese Yen Technical Analysis

As you can see, we pulled back just a bit during the trading session in the early hours on Wednesday, only to bounce again. As we take a look at the chart, the 149.80 Yen level continues to be important, and it has shown itself to be somewhat supported. With that being the case, I like the idea of taking advantage of “cheap US dollars” anytime we get that opportunity.

Keep in mind though, that this is the non-farm payroll week, and that announcement will make a significant effect on this market likely. After all, this market is driven by interest rate differential more than most others and interest rates will be thrown around by that jobs report. That being said, this is still an uptrend and that hasn’t changed. The 50-day EMA underneath will continue to be an area of support.

And then after that, we have the 147.33 level as a potential barrier as well. In general, this is a market that I think continues to see a lot of noise, but I do think eventually the buyers will not only reach higher, but perhaps reach the 152 yen level. If we break above the 152 yen level, it’s likely that we have more of a buy and hold scenario. In that environment it would not surprise me at all to see this pair travel to the ¥155 region, as it is the next large, round, psychologically significant figure.

in general, this is a situation where you’re just looking for value in the US dollar because the interest rate differential continues to be very strong. The US central bank of course may cut later this year but it’s going to be nowhere near as loose with its monetary policy as the Bank of Japan will be. At this point the Bank of Japan is just now considering going to neutral rates, so it really does not pay to own the yen over the longer term and this chart reflects that.

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This article was originally posted on FX Empire

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