The U.S. dollar has gone back and forth against the Japanese yen during trading here on Friday, with the 200-day EMA offering a bit of a floor. The ¥159 level above is a significant barrier, and it is worth noting that although we have pulled back just a bit, we have seen quite a bit of support underneath. We are in the process of forming a bit of an ascending triangle.
The interest rate differential continues to favor the US dollar
If that plays out, then a break above the ¥159 level opens up the possibility of a move toward the ¥162 level. The interest rate differential continues to favor the U.S. dollar, and the Bank of Japan, of course, has intervened a couple of times. They are trying to talk down the pair.
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Interest rates in America have dropped a bit, but later in the day here on Friday, we have turned around and seen the U.S. dollar rally as a result. Ultimately, this is a market that I think needs to see a little bit of clarity, and in the meantime, short-term traders continue to trade this market very nimbly.
I suspect more to the upside than down. If we were to break down below the 200-day EMA, then it could open up the possibility of a drop down to the ¥156.50 level, but we will have to wait and see.
Ultimately, I am bullish of this, and you do get paid at the end of every day, so I still like it. I just think you are going to have to temper your expectations for some type of explosive move.
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