- The US dollar has begun the trading session on Monday by slightly retreating against the Japanese yen.
- As a result of Jerome Powell's eventual admission that interest rates would rise later this year, the selloff that lasted the most of last week is continuing.
USD/JPY Continues to Look for a Floor
If you look at the dollar on Monday, you can see that it has weakened slightly compared to the Japanese yen, but it does appear that things are beginning to stabilize. In the end, I believe there will be a lot of loud behavior in this market. Of course, there is also the circumstance in which people are examining this pair through the lens of potential rate cuts by the Federal Reserve later this year. In light of this, I believe you have a scenario in which it is highly likely that the 147.33 level above will provide some resistance. In the event that we surpass that barrier, the market is probably going to target the level 149.80.
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The 200-day EMA is located below, and since it is little above the 145 level, it is obviously a region that will draw a lot of attention. Every session ends with the US dollar continuing to pay swap, so I do believe that eventually longer-term traders return to this market and take advantage of that. However, it appears that we need to burn off some of the extra foam from earlier.
I think it makes some sense that market participants will continue to be very interested in this area because we are essentially at a place where we have previously seen support. A lot of this will depend on whether or not we can gain any momentum. Although the US is expected to lower interest rates later this year, the Bank of Japan is far from doing so. For this reason, I believe it is important to consider both currencies' longer-term outlooks. Although both would eventually likely have loose monetary policy, the US is still a long way from experiencing that. In light of this, I'm searching for a chance to go long in this market, but I'm not seeing one just yet.
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