The US dollar has been all over the place in the month of February, as we are looking at testing a resistance level that goes back to 1990.
USD/JPY
The US dollar has been very noisy against the Japanese yen during trading on the month of February, but at this point in time we continue to see this market try to reach the crucial area right around the 158 yen level, which might extend to roughly 160 yen, maybe even as high as 162 yen, depending on how far back you look as far as resistance is concerned.
This pair has seen plenty of buyers on dips and the interest rate differential still favors the US dollar, which is something that means a lot to me and I do tend to follow that.
Keep in mind that the Japanese were thought to be trying to normalize interest rates in an environment that quite frankly the Bank of Japan cannot do so with a massive amount of debt. They essentially have a choice between either having a viable currency or driving down the debt.
Japanese Economic Challenges and Long-Term Projections
Eventually, Japan probably implodes from a financial standpoint because of demographics, debt, and eventually the currency markets, but what I'm looking at here is a pair that is testing a major resistance barrier going back to 1990.
Breaking above the 162-yen level would be clear and could send this pair looking to much higher levels, and in fact, if you look at the monthly chart, you might even be talking as high as 250 yen. I think that does happen eventually, but I also recognize that it's a huge process. It's not something that will happen easily.
In the month of March, I'll be watching the 152-yen level very closely. I think that should remain support. If it does not, then we could find ourselves dropping to the 148-yen level. Otherwise, I'm buying dips and I'm collecting swap at the end of every day.