- The US dollar initially rallied during Wednesday’s trading session, but the 145 yen level continues to act as a strong resistance.
- This level has held firm, and it's widely seen as a critical threshold.
- Adding to the challenge is the 50-day EMA hovering just above, which could further hinder upward momentum.
Nonetheless, I think this is a market where the interest rate differential will continue to favor the US dollar. And despite the fact that CPI was a little bit cooler than anticipated in America, I still think we have to pay close attention to the whole idea of the trade situation between the United States and China having a major influence on risk appetite as well. After all, the Japanese yen is considered to be the ultimate safety currency, if you will.
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Pullbacks Could Be Interesting
So, we'll have to see how that plays out. With that being said, I think you have a scenario where a pullback almost certainly gets bought into just as a breakout almost certainly will get bought into. I don't really have any interest in trying to short this market right now as the 142 yen level has been important multiple times.
I think that your floor breaking down below there opens up the possibility of a drop down to the 140 yen level, which has even more ramifications from a support standpoint. All things being equal, this is a market that I am positive on, but I recognize you're going to have to sit around and just get paid to swap and be very patient between now and the move that we do end up having. A lot of patience here goes a long way.
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