USD/JPY Signal: US Dollar Continues to Pressure the Yen

• The USD/JPY has managed to gain a bit of momentum during Monday’s trading session, particularly against the Japanese yen.
• The ¥134 level is a key area to watch as it has been an important level in the past, and a break above it could lead to a quick move toward the psychologically significant ¥135 level.
• However, if the market turns around and breaks down from here, the 200-Day EMA could provide short-term support, with the 50-Day EMA closer to the ¥133 level.

While the market is likely to continue to be volatile, it does seem that there is a concerted effort to break out to the upside, with the US dollar looking to recover from an oversold condition across the world. With the Bank of Japan continuing to keep its interest rates low, and the rest of the world tightening its monetary policy, the stage is set for a potential shift in attitude towards the US dollar.

That being said, the ¥131 level is an important area of support, with the ¥130 level being even more significant. The market will need to see a bit of downside momentum before building up the momentum for bigger moves to the upside. The major top at ¥137.50 is also worth watching closely, as a break above this level could signify a more sustained rally in the US dollar and potentially turn it into a “buy-and-hold” environment.

The Market Will Continue to Show Signs of Bottoming

Overall, the US dollar is likely to remain supported over the longer term, with the market presenting opportunities to pick up dollars at short-term dips. However, patience will be key, as the market continues to be sensitive to headline news and geopolitical concerns. It is important to be cautious with position sizing and wait for clear signs of support before entering trades.

In conclusion, while the US dollar has shown signs of life against the Japanese yen, the market is likely to remain volatile. Traders should watch key levels of support and resistance and be patient in waiting for opportunities to enter trades. With the potential for a shift in attitude towards the US dollar, the market presents opportunities for savvy traders to pick up value at short-term dips. This market will continue to show signs of bottoming, but it will be a messy affair and should be traded as such.

Signal: Now that the pair has broken out to the upside, it is likely to reach the 136 level next. A stop loss under the 133 level should suffice on longs. Selling isn’t a thought at the moment.