The US dollar fell against the yen in early Tuesday trading, as we see a lot of questions asked about a major swing high dating back to 1990.
USD/JPY
The US dollar initially fell during the trading session on Tuesday only to turn around and show signs of life. All things being equal, this is a market that I think continues to threaten the 160 yen level above, an area that extends to the 160.4 yen level which is a swing high from 1990. With that being the case, I think the entirety of the market is definitely watching this.
With interest rates in the United States climbing the way they are, things might be difficult for the Japanese to push back on this, at least with any real strength. It's worth noting that the Japanese yields have been rising as well, but there is still a significant gap and that continues to make the US dollar more attractive than the Japanese yen. Furthermore, the Federal Reserve may find itself forced to stay tighter for longer and I think the market is finally coming to grips with that.
Support Levels and Buy-on-the-Dip Opportunities
Even though it's a 1990 high that we're threatening, I don't really have any interest in shorting this market, at least not right now and of course at least not until there's a reason for the Federal Reserve to actually loosen monetary policy. With that being the case, I think you have to look at this as a market that is probably a buy on the dip scenario and probably continues to see that the markets are probably going to be a bit choppy.
I think in general; I think a market that value hunters continue to come back to time and time again. The 50-day EMA sits at 158.40 yen and is rising and has been reliable. Underneath there, we have the 158 yen level that should offer support. If we do break out from here, this is a market that could go very far.