- I suspect that the most likely outcome, at least over the next couple of weeks, might be sideways action as we carve out a 350-pip range or so.
- The US dollar has drifted lower against the Japanese yen during early trading on Wednesday, but it is starting to see a little bit of pushback.
- I believe that the 155-yen level is an area that a lot of people will be watching very closely as it could end up being a bit of a floor, especially with the 50-day EMA sitting just below it.
All things being equal, this is consolidation, but it is also a very high level of pricing that we haven't seen since the beginning of 2025. So, the question now is, are we bumping into a ceiling? I think it is a little early to suggest that at the moment, but it is a possibility so I will be watching.
Market Volatility and Technical Levels
The 158-yen level is an area that offers significant resistance, but again, the 155-yen region offers significant support. The 50-day EMA, of course, is an indicator that a lot of people watch, and it sits at 154.50 yen, so that all ties together quite nicely.
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The Japanese yen had seen a little bit of volatility after the Bank of Japan raised rates last week, but the reality is, I don't think most of the market likes that, and they may punish Japan for that. I don't think the market believes that the Japanese can aggressively raise rates anytime soon, while the Federal Reserve at least could make an argument that some of the most recent data have suggested that maybe they have to be very measured in their rate-cutting cycle.
All things being equal, this is a very noisy market, but I believe that it eventually goes looking to the upside. Even if it doesn't, I would reset somewhere near the 152-yen level and start to look for support there as the 200-day EMA is in that neighborhood.
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