The US dollar fell a bit during the session on Monday but found enough support below the uptrend line to show signs of life and bounce a bit.
The yen is a popular commodity in turbulent times
At this point, if we can break above the top of the candlestick, the market could turn around and try to go looking towards the ¥105 level. Decidedly, the system will continue to be very volatile and there could be a big fight in this area. Keep in mind that the ¥137.50 level has been important a couple of times, and the fact that we have bounced from there is a good sign.
The value of ¥140 is a large, round and psychologically significant figure, and it allows for the possibility of a move towards the 50 day EMA. If we surpass that level, we are likely to go much higher. The market has been very strong for quite some time, at least until recently. However, looking at it from a long-term standpoint, this is just another pullback that we’ve seen for a while. As long as we stay above ¥135, we’re fine and probably can go up in the long run. However, if we break down below ¥135, the correction could be much deeper. Check the price of the USD/JPY pair today.
One of the biggest drivers would probably be the Bank of Japan and whatever it decides to do. If the Japanese yen were to suddenly relinquish control of the yield curve, the Japanese yen would strengthen significantly, which could send the pair lower.
From the Technical Analysis Study:
- To a large extent we are seeing a readjustment of the expectations of the interest rates, as the Fed may be nearing a slowdown, or at least a pause in the pace of acceleration and its rate hikes.
- However, there could be a lot of noise in the next couple of days when the US Core PCE data is released, something the Federal Reserve pays close attention to.
- Also, keep in mind that the number of jobs that will be released on Friday will almost certainly be very high and this could give us an idea of where we are going.
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