The US dollar has rallied slightly against the Japanese yen during the trading session on Monday, as we have reached towards the high of the last couple of sessions, but at this point I think short-term pullbacks will probably be looked at as buying opportunities. I believe that the ¥112 level underneath is going to act as significant support, but the pair tends to be very sensitive to risk appetite, and with the midterm elections going on during the day on Tuesday, it’s likely that the markets will be extraordinarily volatile. I anticipate that a short-term pullback makes sense, but ultimately, if we break to the upside, there is a lot of resistance all the way to the ¥114.50 level. We will probably take several attempts to get above there, and once we do the “all clear” isn’t signaled until we break the ¥115 level, which would signal the next major leg higher.
USD/JPY Video 06.11.18
A lot is going to write on the elections in this pair, and if the Republicans can hold onto both the House of Representatives and the Senate, I suspect that the US dollar will rally based upon a stock market rally. Currently, the idea of the Democrats taking back the House of Representatives is probably already baked into the numbers and therefore will probably only have a limited effect on this market. I’m still bullish, but mildly so as there are so many moving headlines.
This article was originally posted on FX Empire