The US dollar initially dropped on Tuesday against the Japanese yen but continues to see a lot of buyers on these dips that continue to occur. At this point, there is a real barrier above, but the market looks like it wants to challenge it.
USD/JPY
The US dollar initially fell against the Japanese yen in early trading on Tuesday but then turned around to show signs of life as we continue to see the uptrend play out. This is a pair that I'm particularly interested in because we are getting fairly close to the idea of smashing a swing high from 1990, and that, of course, is not something you see every day.
If that does in fact happen, we could see, at least based on the measured move, the US dollar eventually finds its way all the way back to the 224-yen level. That obviously would take a very long time to play out. And in a certain amount of sense makes this an investment.
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Central Bank Intervention and Support Levels
That being said, we've recently seen the Bank of Japan intervene and that of course is something that people will have to watch very closely because one would think eventually, they may try to do it again. With that, I like the idea of buying dips in this market, and I do think it's probably only a matter of time before any dip gets bought into.
Even if we were to break down below the 160-yen level, the 159-yen level offers support as well as there is the 50-day EMA. On central bank intervention, I would just simply wait a day or 2 and look for momentum to re-enter a long position.
You get paid at the end of every day to hold this position to the long side, and I fully intend to do that until something fundamentally changes. At this point, the interest rate differential remains extraordinarily strong, and the Federal Reserve doesn't look likely to cut rates.
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