- The US dollar has rallied significantly during the trading session here on Tuesday against the Japanese yen as we continue to see the interest rate differential come into the picture.
- Furthermore, you have to keep in mind that interest rates in America have been spiking in the bond markets.
- So you're getting paid more and more as time goes on to hold US dollars against the Japanese yen.
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The Bank of Japan continues to have to worry about its bond market as nobody wants to buy them. And therefore they will have to step in and eventually be the buyer of the last resort. That is what most of you know as quantitative easing. That of course is a very simplistic way to describe it, but that's essentially what we're talking about.
The market has been bouncing around between 148 yen on the top and 142 yen on the bottom for the last couple of months, we are getting close to that top. And what's particularly interesting now is that the 200 day EMA is sitting near the 148 yen level, causing it a bit more aggressive as far as the way it looks as a ceiling. If we were to break above that level, I do believe it would only be a matter of time before we would go looking to the 152 yen level.
Ultimately, this is a situation where traders probably continue to come back in and buy dips because the 50 day EMA sits right around that 145 yen level, which has been like a magnet for price in the middle of this consolidation area. I do think ultimately, we break out. I do think that we're in the middle of a consolidation range, but all things being equal. You have to be very patient. You're going to have to look for some type of value on a dip as well. I have no interest in shorting this pair.
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