The US dollar fell against the yen on Tuesday, as rates in the US also fell. At this point, I will be looking for value in the Greenback to get long again.
USD/JPY
The US dollar has fallen against the Japanese yen during trading on Tuesday as the 160 yen level continues to be a bit of a barrier. That barrier extends all the way to the 160.40 yen level in my estimation, which is an area that has been a massive swing high that goes all the way back to 1990. With this being the case, I think you have a situation where if we can break above there, you probably have more of a buy and hold trade.
Until then, I think you have to look at this as a buy on the dip situation as the interest rate differential continues to pay you, but it is also a market that is more or less trying to figure out where to go next. I think this is a market that will eventually break out to the upside but will have to be very patient as it is a market that of course has a lot of things going on at the same time.
Balancing Stimulus and Inflation Risks
The first one of course is going to be that the Bank of Japan is of course balancing the need for stimulus and the need for fighting inflation. Sooner or later, something has to give and it may very well be the Japanese yen itself.
We will have to wait and see. Short-term pullbacks I think support at 158 yen comes into the picture right along with the 50-day EMA. I have no interest in shorting this pair. I do not pay the swap at the end of the day, and I have no interest in starting now. A little bit of patience probably goes a long way. A little bit of value is what I would like to see to buy this pair yet again.