- Over the next couple of days, I think we will stay well within this 400-pip range because volume will start to dissipate.
- The US dollar fell significantly during the early hours on Tuesday against the Japanese yen.
- The market is looking like it's trying to turn things around and show signs of life, and with that being the case, the market may be trying to find some type of range to trade in.
The 154 yen level seems to be massive support, while the 158 yen level seems to be a significant resistance barrier. All things being equal, this is a market that I think is trying to determine what is going to happen with central banks, especially with the Federal Reserve, as traders are starting to bet on more interest rate cuts going into the future.
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Normalizing Rates
But at the same time, the Bank of Japan is trying to normalize rates. Whether or not that actually ends up being the case and whether or not they can actually do it to any significant amount remains a question to be answered, but I think we have to look through the prism of a market where you are seeing a positive swap at the end of every day if you're long.
I think that's part of what we've seen during the trading session on Tuesday as we head towards North America. Traders are trying to turn things around and reach back towards the 158 yen level. Over the next couple of days, I think we will stay well within this 400-point range because volume will start to dissipate, and several central banks are not only going to be closing down the banking system on Thursday for Christmas, but you will also see the Friday session being a major holiday in most of the larger countries as well. After that, you have the week of New Year's, and that really is kind of messy as well. So I think you're looking at a 400-point range between now and next year when traders start to throw more liquidity in.
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