The US dollar drifted a little lower in the early part of the session on Wednesday, as traders waited for the interest rate decision and press conference in America. Traders are now looking at a potential rate hike later this year.
USD/JPY
The US dollar drifted a little bit lower early during the trading session on Wednesday but found the 160-yen level to be supported yet again on Wednesday, as the market just seemingly has nowhere to be at the moment.
Ultimately, I think this is a currency pair that is worth watching mainly because we are on the precipice of perhaps breaking a swing high that goes all the way back to 1990. If that were to happen, it could open up a move towards the 224-yen level over the longer term. This would take some time to play out, but at the end of the day, it would be a massive investment just waiting to happen.
Interest Rate Differentials and Technical Levels
The Bank of Japan has recently raised interest rates, but it's clear that they really can't do much more at this point. The interest rate differential continues to favor the US dollar, and it's worth noting that the Federal Reserve is probably still some distance from raising rates or cutting them, for that matter.
So, with that being said, the market is likely to continue to favor the upside as we just don't have anywhere to be right now that would contradict the overall uptrend. If we can clear the 161-yen level, then it's very possible that we get the market moving much quicker.
Top Regulated Brokers
A pullback from here will look at the 50-day EMA near the 159.20 level as potential support. Ultimately, I have no interest whatsoever in trying to short this USD/JPY pair. I think before it's all said and done, we have a scenario where traders are looking to find value anytime in the US dollar
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