- The US dollar has rallied pretty significantly against the Japanese yen as trading on Friday ended.
- We continue to see a lot of interest rate differential between these two central banks.
- The idea that the Japanese yen is suddenly going to pick up value is a bit of a laugher.
- This is a market that may not be overly bullish, but it won’t be one that will be able to be shorted easily anytime soon.
Bank of Japan is Stuck
Due to the fact that the Japanese cannot raise interest rates significantly, they just have too much debt. It's a dead spiral that they've been in for years. So, with that being the case, I almost never buy the yen. And that's definitely true. Right now, the Federal Reserve is likely to cut rates later this year, but we are light years away from some type of negative carry.
So, traders will continue to look at this through the prism of getting paid at the end of every day that is something they like. Ultimately, the 149.80 level of bomb is an area of resistance. If we can break up there, then we go looking to the 151 level. After that, we have the 152 level, which was the peak. Breaking that will certainly attract a lot of attention, and people will react accordingly.
Anything above there, then it opens up the possibility of a move to 155. Short term pullbacks continue to offer buying opportunities with the 147.33 level underneath, offering a significant support level. Underneath there we have the 200 day EMA that comes into the picture as well, offering support. Ultimately, I do think this market goes much higher, but a lot of this could come down to short term buy on the dip trading and not necessarily longer term buy and hold, unless of course you are an institution, and you have big enough positions to make the swap truly affect your account. That being said, I am bullish and I remain so.
Ready to trade our daily Forex analysis? We’ve made this forex brokers list for you to check out.