USD/JPY Forecast – US Dollar Continues to See Strength
US Dollar vs Japanese Yen Technical Analysis
The US dollar continues to rally against the Japanese yen during the trading session on Wednesday, and it does look like we are trying to do everything we can to break out to the upside at this point in time. I don’t see any argument for shorting this pair because quite frankly, the interest rate differential is too wide to try to pay just to short this market. The ¥160 level underneath is a massive support level, and I do think it will be an area where people are very interested in trying to get involved. It was where the Bank of Japan intervened previously, so therefore there should be a lot of market memory there.
Furthermore, we have the consumer price index numbers and the producers price index and numbers coming out over the next couple of trading sessions, and that will have a major influence on what people think the Federal Reserve will do if those numbers are hotter than anticipated. This pair will go straight up in the air if they’re lower than anticipated, we may get a little bit of a pullback.
And quite frankly, I think that offers the buying opportunity you’ll be looking for because even if the Federal Reserve were to cut rates by a quarter point sometime this year, that still leads to a huge interest rate differential that gets you paid at the end of every day. Granted, it’s not as much interest, but it is still a significant amount. I think at this point, we are just simply waiting before we get another momentum push into the next leg higher.
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This article was originally posted on FX Empire