The US dollar has demonstrated some degree of resilience as we consistently rise back up to test the ¥150 mark after declining versus the Japanese yen. The ¥150 level, which has already proven to be highly durable in terms of resistance, is a place where we would expect to see a lot of psychology come into play.
Given that the interest rate difference between the two currencies still favours keeping onto it, it seems clear to me that there should be plenty of buyers prepared to enter the market on pullbacks at this time. But recently, we have seen the Bank of Japan attempt to hold onto the ¥150 level while simultaneously entering the bond market and beginning to drive rates back down. Put another way, they are actively involved in quantitative easing, which naturally devalues the currency.
The 50-Day EMA is speeding towards the ¥147.80 mark, an area that has historically shown a lot of support, on a downturn from this point. Even if the Japanese decide to intervene in the markets once again, I don’t think this pair will fall down below what I consider to be the current “bottom of the market.” Conversely, if we manage to close above the ¥150 barrier on a daily basis, I believe it will not be long before we examine the ¥152 mark, which is where the market had retreated from at its last peak.
As soon as we finally get some clarity and momentum, this market will be turbulent. We could witness a really dramatic shift once it occurs, and I’m certain that it will. This week, the US will release its GDP, which might have a significant impact on the overall behaviour of the US currency. Whichever currency you compare the Japanese yen against, I do not like and do not now possess.