The U.S. dollar strengthened sharply against the yen on Monday, rebounding from ¥150 support with a bullish hammer formation. Analysts expect continued upside toward ¥153, supported by yield differentials, while pullbacks remain buying opportunities above ¥147.
- The U.S. dollar has rallied significantly during the trading session on Monday against the Japanese yen, kicking off perhaps the next leg higher as the ¥150 level has often offered a bit of support, with the Friday candlestick showing itself as a hammer.
- The hammer, of course, is a very bullish sign, and therefore I think you have to look at this as a market that is probably trying to reach towards the ¥153 level.
- If we break down below the hammer from the Friday session, then we start to look at the 50-day EMA, which is an indicator that a lot of people will be watching. And there's a gap underneath there that is supported by the 200-day EMA.
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Ultimately, this is a market that I think continues to see a lot of upward trajectory, mainly due to the fact that the interest rate differential continues to favor the U.S. dollar. And I just don't see how that changes anytime soon. Ultimately, this is a market that has been breaking out for a while.
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And as you get paid at the end of the day, if you've been watching me for several months, all the way back to somewhere in June, I think I have started to tout the strength of the idea of being long in this market, and I have been long in this market for quite some time.
At this point, it's going to be more of a grind to the upside than anything else, but you get paid to wait, and I think that's a huge advantage. If we were to break down below the ¥147 level, then okay, things change. But until then, this looks like a market where short-term dips offer the possibility of buying opportunities to take advantage of as market participants continue to shun the Japanese yen for a whole host of economic reasons in that country.
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