- Given that the FOMC Meeting Minutes were released on Wednesday and the US dollar finished the trading session essentially unaltered, the US dollar was relatively quiet during the early hours of Thursday's trading session.
- This is somewhat of a triumph in and of itself.
The USD/JPY Pair Continues to consolidate
When looking and comparing the value of the US dollar to the Japanese yen, it is obvious we are bullish. In the end, we are positioned about near the 150 yen mark. Furthermore, it appears to me that the market is making every effort to rise to the 152 level higher. Having said that, it's likely that in the near future, if we continue to move in the same manner, we will see some little working off of the froth. It's not shocking to see things occur in this kind of setting as this is typical market behavior.
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If we retreat from this level, there's a chance we'll see a move down to 148.50 yen, which has historically been seen as strong barrier. The 147.33 yen barrier and the 50-day EMA are located just beneath that. Remember that the FOMC meeting minutes were released on Wednesday, and the underlying minutes indicated that there was a lot of debate over inflation concerns during the meeting. As a result, the dollar has been relatively strong compared to the yen, but it is crucial to note that it did not lose momentum. Having said that, I do believe that a breakout is likely just a matter of time. After all, given Japan's enormous debt load, the Bank of Japan is far from being able to tighten monetary policy.
In the end, I do believe that we not only hit the 152 yen level, but that there will likely be a move to the upside in an attempt to hit the 155 yen level once we break above it in a bit of FOMO trading. The interest rate differential is the main factor in this, along with the swap that you get paid at the conclusion of each trading session. In an extended rise like this, the swap does, of course, become significant. After all, because it yields cash at the end of each day, it is essentially a longer-term investment than anything else.
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