The US dollar fell at the beginning of Thursday’s session, But he found the support level I was talking about earlier as sufficient reason to enter into a long position. The level of 132.50 yen has held, and now it seems that the market is trying to rise again. Keep in mind that this pair has been driven almost exclusively by interest rates, so you’ll need to keep an eye on the bond markets.
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The US dollar saw a slight decrease in US interest rates, which of course was negative for the dollar. However, we have also seen some stabilization, which has helped the Japanese yen. The reason for this is that the Bank of Japan continues to defend the 0.25% rate on the 10-year bond, which means that if interest rates start to rise everywhere, This means that there is some kind of “adverse effect” in the Japanese bond market. By looking at this chart, you can see that we have been in a long-term bullish trend, and with interest rates rising in the US, we saw that the Japanese should print more yen. This was a perfect setup for this trade, and now looks like we may continue to see that.
The 50 day EMA is above the highs of the Wednesday session, so if we do break above that level it is possible that we will see more upward pressure at that point, as the market will start to see it as momentum building up. At this stage, The market is likely to test the highs again, and maybe more. I think the 140 yen level might be a possibility, but it will probably take a lot of momentum to get there. I expect a lot of noise and therefore you have to be very careful about your position size. Ultimately, as long as we stay above the 132.50 yen level, not much will change, and it looks like the market will be bullish. If we do break below that level, we might look to move all the way to the 127.50 yen level. Either way, you will have to watch the direction of the bond markets and interest rates.
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