The US dollar rallied against the Japanese yen during the day on Thursday, showing signs of strength yet again. By pulling back towards the ¥110 level and bouncing the way we have, it signifies that perhaps we are ready to continue the uptrend and make a serious move towards major resistance above.
The US dollar initially pulled back against the Japanese yen during trading on Thursday, reaching towards the ¥110 level. This is obviously a large, round, psychologically significant figure, and an area that has been structurally important more than once. Because of this, it makes sense that we would bounce from there and as the US dollar strengthen after the ECB announcement and press conference, this had a bit of a knock on effect over here as well. Because of this, I think that the market will continue to grind higher, and that short-term pullbacks should be thought of as potential buying opportunities.
I think that ultimately this pair will continue to go higher based upon risk appetite anyway, and of course the interest rate differential that is so stark and contrasted between the United States and Japan. I do recognize that there is a lot of noise extending to the ¥112.50 level, so it’s possible that we may continue to see a lot of back-and-forth. Short-term buying on the dips probably remains the best way to play this market, as I think that the US dollar is getting ready to have a summer of strength again. By doing so, it’s very likely that the market will offer plenty of opportunities for those who are patient enough to wait for value in the greenback. Stick the short-term charts, they could lead the way but also be aware that this pair is typically volatile and very sensitive to risk overall.