USD Continues to Probe Higher the Yen

A pullback may be necessary for traders to come into the picture and start buying the dollar again.

• The US dollar has rallied significantly against the Japanese yen during Wednesday’s early trading hours.
• However, the yen is starting to form a defense near the ¥138 level, which may cause hesitation in the market.
• This could be a sign that we are running out of the buying frenzy that we had seen, and it may make sense for the market to pull back and allow traders to pick up the dollar again.

If the market can break above the top of the candlestick, it’s possible that it could send the market to the ¥140 level, which is a short-term target. However, this doesn’t necessarily mean that the market won’t pull back, and a pullback may be necessary for traders to come into the picture and start buying the dollar again.

Federal Reserve Chairman Jerome Powell stated on Tuesday that the Federal Reserve may have to raise interest rates much quicker than anticipated. This could lead to a lot of US dollar strength in general, which could be a contributing factor to the market’s recent rally against the yen.

If the market does pull back significantly, the ¥135 level could be the barrier that buyers use to take advantage of. Additionally, the 50-Day EMA has just broken above the 200-Day EMA, indicating that longer-term traders may be looking to get involved in the market. It’s worth noting that the market recently endured a massive selloff, but it turned around at the 50% Fibonacci level from the massive move higher last year.

The Bank of Japan is still playing the same game with yield curve control, and all they want is 50 basis points on the 10-year JGB. They will have to continue to print yen, which could drive down the value of the Japanese currency in general. Add to that the fact that the Americans are tightening monetary policy, and this sets up a perfect opportunity for this pair to continue going higher.

The dollar has rallied significantly against the Japanese yen, but there may be some hesitation in the market as the yen forms a defense near the ¥138 level. A pullback may be necessary for traders to come into the picture and start buying the dollar again. However, if the market can break above the top of the candlestick, it’s possible that it could send the market to the ¥140 level. It’s worth noting that the Bank of Japan is still playing the same game with yield curve control, which could drive down the value of the Japanese currency in general, while the Americans are tightening monetary policy. All of these factors could set up a perfect opportunity for this pair to continue going higher.

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