US Dollar vs Japanese Yen Technical Analysis
The US dollar has pulled back just a bit against the Japanese yen during trading on Tuesday in the early hours. However, we still have a significant amount of support underneath and I think that probably is what people will be paying more attention to than anything else. With that being said, as long as the 155 yen level is below current pricing, I do think there are plenty of buyers. Even if we were to break down below there, I still think there’s plenty of support near the 152 yen level, but I don’t foresee us breaking down that much, at least not right away.
If we can recapture the 50-day EMA above, I think that’s a strong sign that we are heading back towards the 160 yen level. The interest rate differential continues to favor the US dollar. And at the end of the day, that’s one of your big drivers here. The Bank of Japan simply cannot tighten monetary policy, at least not in any significant amount, due to the massive debts that the Japanese currently face. So, at this point in time, the best they can do is occasionally intervene and slow the destruction of the Japanese yen. As things stand right now, without some type of massive move by the Federal Reserve, I still think you’re looking at a pair that goes higher over the longer term, but it will be choppy from time to time.
