The US dollar continues to see a lot of noisy trading against the Japanese yen, as we continue to see a lot of price action dictated by the bond markets and the noise around the headlines.
The U.S. dollar has gone back and forth against the Japanese Yen during the course of trading here on Tuesday, sitting just below the 200-day EMA. This is an indicator that is important in general, and the fact that we are here suggests that we are looking for some kind of solution to the momentum problems.
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That being said, the market continues to see a lot of questions asked about interest rate differentials. With rates in the United States jumping, the reality is that the U.S. dollar remains somewhat bid. This is a little bit different here, as the Bank of Japan has gotten involved and intervened a couple of times.
We are at a confluence of interest right around the 158 yen level
The 200-day EMA and the 50-day EMA indicators are both offering a little bit of dynamic resistance. With this, I think the market probably finds itself hanging around this area. You do get paid to hang on to this pair to the upside.
But also keep in mind that the jobs number comes out on Friday, and Wednesday has Core PCE coming out of America. That is a situation where the markets might be a little hesitant to get overly aggressive.
But I do like the upside here. I recognize that the market will continue to be one that I like to the upside, that pays you at the end of every day, and I think probably will continue to be a carry trade. But there is also the concern that we may get the occasional intervention. That intervention, to me, just offers more opportunity. We've seen that happen multiple times.
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