The US dollar has been rallying quite nicely over the last couple of weeks against the Japanese yen after touching just below the ¥107 level. At this point, the market is pressing up against the 50 day EMA which of course is crucial, but beyond that we also have obvious resistance near the ¥108.75 level.
With that being the case, it may be a bit counterintuitive to the newer traders to see US strength as the Federal Reserve is all but assured to cut interest rates in July. However, this pair focuses more on risk appetite, and lower interest rates in the United States should propel the S&P 500 higher, which has a knock on effect here.
You can see that the 61.8% Fibonacci retracement level has offered support from a longer-term standpoint, but with the 50 day EMA above I think we need to see a daily close above there in order to take off to the upside. I would wait for a daily close, and that could be a sign of real conviction, especially if we can close towards the top of the range. However, if we pull back from here we will probably have to “reset” and look to be buying near the ¥108 level based upon some type of bounce or supportive looking candle. It is not until we break below the Wednesday hammer that I would be concerned about what seems to be a bottoming process that shows real promise.
With all of that being the case I would slowly enter this trade, perhaps adding as it works out in my favor. If we were to break above the ¥110 level, that could really send this pair much higher. Obviously, that’s down the road but longer-term that’s an area worth paying attention to as it will attract a lot of attention anyway.
With that being the case, it may be a bit counterintuitive to the newer traders to see US strength as the Federal Reserve is all but assured to cut interest rates in July. However, this pair focuses more on risk appetite, and lower interest rates in the United States should propel the S&P 500 higher, which has a knock on effect here.
You can see that the 61.8% Fibonacci retracement level has offered support from a longer-term standpoint, but with the 50 day EMA above I think we need to see a daily close above there in order to take off to the upside. I would wait for a daily close, and that could be a sign of real conviction, especially if we can close towards the top of the range. However, if we pull back from here we will probably have to “reset” and look to be buying near the ¥108 level based upon some type of bounce or supportive looking candle. It is not until we break below the Wednesday hammer that I would be concerned about what seems to be a bottoming process that shows real promise.
With all of that being the case I would slowly enter this trade, perhaps adding as it works out in my favor. If we were to break above the ¥110 level, that could really send this pair much higher. Obviously, that’s down the road but longer-term that’s an area worth paying attention to as it will attract a lot of attention anyway.
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.