The dollar has fallen against the Japanese yen as rates drop. The interest rates in the US falling would take one of the reasons for the rise of the USD out of the equation. That being said, the Japanese yen has its own issues.
USD/JPY
The dollar has fallen pretty hard during the trading session on Wednesday as one would expect with the announcement of the ceasefire in the Middle East. This would have brought in a little bit more in the way of risk appetite and as a result I think you have to look at this as a market that when you combine that and the severity of the 160 yen area as resistance going back to 1990 it does make sense that we pulled back.
The question now is whether or not the 50-day EMA and by extension the 158 yen level can hold as support. The interest rate differential still favors the United States by a wide margin so there will be carry traders out there looking to buy the dollar against the yen.
Interest Rate Differentials and Support Levels
The market breaking below the 50-day EMA would signify quite a bit of attitude adjustment by the market and could open up a move down to 156 yen but I'm more inclined to buy this dip as we eventually have to come to terms with the fact that the Bank of Japan really can't do much as far as raising rates and the United States may have to keep interest rates somewhat higher than most traders would like.
So, if that's going to be the case, I think you have to look at this as a potential buying opportunity. You need to see a little bit of a bounce from here. In this environment, it pays to be patient with putting positions on.