The US dollar has broken out during the session on Tuesday, finally clearing the drastically resistive ¥110 level. This is an area that has caused a bit of resistance several times in the recent past, and it looks as if now that we have cleared this area, the market is ready to go much higher. That’s not to say it will go up in a straight line, but I think that the ¥112.50 level above could be a bit of resistance. I think that at this point the ¥110 level will start to act as support, as the USD/JPY pair looks ready to go higher for the longer-term. I believe that the ¥112.50 level is a magnet for price, but I also recognize that we will probably break through there after a couple of attempts.
I don’t have any interest in shorting this pair, as I believe that the interest rate differential will continue to widen, as the Bank of Japan looks very unlikely to ease up on quantitative easing, and more than anything else would be likely to extend it. Ultimately, I think that dips offer value opportunities, so I would look to build a large core position in this market, unless of course we somehow turned around and broke below the 109 handle, which would negate a lot of the bullish pressure that we have seen recently. That seems very unlikely though, at least not without some type of major “risk off” situation out there.
USD/JPY Video 16.05.18
This article was originally posted on FX Empire
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