- The US dollar pulled back just a bit during the trading session on Monday, but at this point in time, it looks like we have plenty of support underneath to turn things around into signs of life.
- The 152 yen level above continues to be a major resistance barrier that a lot of people will be trying to take out.
The ceiling above
If we can break above the 152 yen level, then it's likely that we have to move much higher, all things being equal, short-term pullbacks continue to be buying opportunities. I believe that the 50-day EMA underneath is a support level as well. In general, I think we have a situation where you are just looking at this through trying to find value and the prism of whether or not there will be buyers coming in underneath.
The interest rate differential continues to be a major driver of what happens next as well. So do keep that in mind. I think you've got a situation where we continue to see a lot of questions being asked, but at this point, we are just working off some of the froth from the move to the upside that we had seen previously. I have no interest in shorting the USD/JPY. I understand that you get paid at the end of every day in the form of swap, so I do like taking advantage of each dip as a potential value play.
All things being equal, this is a market that I think will continue to be very bullish, but there is the occasional pullback that people will have to take advantage of. After all, the interest rate difference between the two central banks will continue to be large, and as a result, traders will hold as they get paid to hold this pair long at the end of every day. This is a market that I think eventually goes looking to the 155 yen level, although I will be the first to admit there is a lot of resistance in this area.
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