- The US dollar has been positive again during the Friday trading session as we are touching the 200 Day EMA, and perhaps more importantly for me, the ¥148 level.
- This is an area that we have seen resistance previously, and the fact that the 200 Day EMA is sitting there as well makes quite a bit of sense.
- All things being equal, this is a situation where I do think that you favor the upside due to the interest rate differential, and of course the fact that the Bank of Japan has to worry about a bond market that is quite frankly, pathetic.
Technical Analysis
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The technical analysis for this pair is somewhat neutral in the short term, negative over the longer term, but in the intermediate term, it does appear that we are doing everything we can to turn things around and rally. I like buying small positions in this market in just simply collecting the swap at the end of every day, suggesting that I could be into this trade to the upside for months. If we can break above the recent swing high near the ¥149 level, that opens up the possibility of a move to much higher levels, perhaps even kicking off a longer-term “buy-and-hold” situation. I do think that eventually this is a being the case, because the US dollar is oversold, and unlike many other pairs, the US dollar is actually the currency that people buy when they are feeling more “risk on.”
If we were to turn around and fall from here, the ¥146 level is an area that I’m watching, as it is the 50 Day EMA sitting right there as well, and of course previously it has offered both support and resistance so I think a certain amount of “market memory” can be found there as well. That being said, the market is likely to continue to see a lot of interest in that area. At this point, I have no interest whatsoever in shorting this pair.
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