- The US dollar continued to find buyers on every downturn, and it rose early in Friday's trading session.
- It seems to reason that the pair will eventually increase in value as long as you are compensated for holding it as the swap differential matters over the long term and can add up over time.
When comparing the US dollar to the Japanese yen, it is evident that the latter has surged significantly early in Friday's trading session. Based on this, it appears that we will be testing the 151 yen level going forward. A certain degree of market memory, in my opinion, enters the picture when we finally break above it and attempt to achieve the 152 yen level, which will ultimately turn out to be a significant high that we had previously placed in the market. That being the case, I think there might be some fighting in that area, but after we get beyond it, the market will see more FOMO and more "chasing." After all, momentum is everything in this market right now, just like it is in other ones.
Working Off Froth
We've been working off some of that enthusiasm lately, so it makes logical that we took a slight detour for a few weeks. I'm not sure how long that will go, but I do believe that at some point the market gives way and we move higher. The US currency will continue to perform well against the Bank of Japan, which has negative rates, because the interest rate disparity favors the US.
Having said that, I think it's a good idea to purchase dips, and I think the 50-day EMA and the 149.8 level are areas of support. In the long run, I wouldn't be shocked if the US dollar moved toward the 155 yen mark, which has some psychological significance as a big round number in and of itself, if we can break above the 152 yen level. Owning this currency pair makes sense since, at the end of the day, the swap pays you to hold onto it, and this can be reason enough to stay long of this market. However, understand that it is volatile at times, and therefore you don’t want to just jump in with huge positions.
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