The trading session on Thursday initially witnessed a decline in the US dollar, underscoring the persistently erratic nature of market behavior at the moment. However, by day's end, the strength of the US dollar remained considerably more than that of the Japanese yen, primarily due to the interest rate differential. It's important to grasp the backdrop that the Bank of Japan endeavors to shape market sentiment, but in reality, the Japanese authorities are hamstrung when it comes to effecting any substantial interest rate hikes. This predicament stems from the Japanese government's profound debt burden, with higher interest rates posing potential systemic challenges.
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Conversely, the Federal Reserve has signaled its intent to maintain its prevailing monetary policy for an extended period. Consequently, the interest rate disparity will continue to favor the US dollar as far as the foreseeable future allows. The 50-Day Exponential Moving Average is a zone where buyers were observed entering the market during the day's proceedings. Nevertheless, it's prudent to keep in mind that the Thursday session coincided with Thanksgiving in the United States, leading to reduced trading activity across global markets. We have been entrenched in an uptrend for an extended duration, and the presence of buyers beneath the market remains an anticipated dynamic moving forward.
Charting the Course Towards the ¥155 Frontier
- Above, the ¥150 level looms as a formidable resistance barrier, marked by its sheer numerical significance.
- Notably, we have breached this level on a few occasions, suggesting that it could be surpassed without necessitating an overwhelming push.
- The ¥152 level higher up is a pivotal point that will command close scrutiny, and a breakout above it is likely required to sustain further upward momentum.
It's worth highlighting that the ¥142.80 level below once again provided substantial support, with Tuesday's formation of a perfect hammer serving as the initial indicator of potential recovery. It's essential to remember that holding this currency pair generates daily gains, maintaining its appeal from a broader perspective. Consequently, there is no immediate inclination on my part to sell this pair. Quite frankly, this is a situation where it is a “one-way trade”, and it should continue to get you paid at the end of the day, via the swap and interest rate difference – that is going nowhere. Ultimately, I think this pair could eventually go looking toward the ¥155 area.
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