US Dollar Jumps Against the Yen on Tuesday
The US dollar has rallied significantly against the yen on Tuesday, as we see plenty of interest rate differential swap paid at the end of each day.
USD/JPY
The US dollar has rallied significantly against the Japanese yen during trading on Tuesday as we have broken above the 50-day EMA showing signs of strength, but all things being equal, it looks as if in the short term, the 156-yen level is going to be a bit of a short-term barrier. A move above there could be more momentum just waiting to happen.
If we break above the top of the candlestick, then we could go looking to the 158-yen level given enough time. I have no interest whatsoever in shorting this market because quite frankly, the interest rate differential continues to see the US dollar be favored over the Japanese yen with plenty of support underneath, especially near the 200-day EMA, which is at the 152.5-yen level and then the 152-yen level. Anything below there could open up the possibility of a massive drop, but at this point in time, the reality is that it would take a major shift in attitude for something like that to happen.
Interest Rate Differentials and Long-Term Targets
So, all things being equal, this is a market that continues to see plenty of buyers waiting to find a certain amount of upward momentum. Ultimately, I think we break out to the upside and longer term, I'm watching the 160-yen level very closely.
If we break above there, it opens up the possibility of a move all the way to the 250-yen level. That is an area that's been resistant all the way back to the year 1990 and a break above there opens up the possibility of a huge move to the upside. I don't think that happens easily, but I do think it's possible.