The US dollar initially rallied against the Japanese Yen on Wednesday, but continues to see a lot of noise. Nonetheless, this is a longer-term uptrend.
The US dollar initially rallied against the Japanese Yen during trading on Wednesday, but then gave back gains as we pulled back toward the 158 yen level. The 158 yen level is an area that has been significant resistance in the past, so it will be interesting to see whether or not it holds up as support.
There is a lot of concern out there about the United States possibly attacking Iran, but we have been down this road numerous times, so I don't really know what changes longer-term structurally. As a result, if we do bounce from here, I am very interested in buying the US dollar.
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I have no interest in shorting this market. I don't care what it did during the trading session on Wednesday; it doesn't change reality. The reality is that we have broken above a major resistance area and now we are testing it.
Support Levels and Long-Term Targets
Whether or not it holds remains to be seen, but I think the 50-day EMA underneath is going to be a significant support level as well. With all of that, I believe you have a situation where buyers are going to be looking to take advantage of value when they can get it and possibly try to push this market to the 160 yen level.
160 is an area that the Bank of Japan intervened in a couple of years ago. Ultimately, as long as the destruction of the Japanese Yen is somewhat subtle and slow-moving, I think we probably have a situation where the Bank of Japan stays out of it.
Structural technical analysis dictates that we could be looking at a 400 pip move from the breakout point at 158 yen, which leads me to believe we could go to 162 yen. I think, given enough time, that is exactly what happens, but we may get a little bit of noise here with some geopolitical issues.
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