The US dollar has rallied significantly during the trading session on Wednesday, reaching towards the highs again. This area has offered significant resistance recently though, so I think that it may take a couple of attempts to finally get through this area. We are sluggish but positive in this market lately, which makes a lot of sense considering that there are so many trade tariff concerns out there right now. The US dollar seems to be picking up a bit of a “safety bid” against other currencies, so that may have a bit of a slight effect on this market as well. Beyond that, and perhaps even more importantly, the interest rate differential between the United States and Japan seems to be a consistent driver to the upside.
With the Japanese bond markets inverting, it’s very unlikely that normalization will come anytime soon out of the Bank of Japan, and therefore people are speculating that the Yen is going to continue to fall in value. Combining that with a lot of uncertainty around the world, it makes sense that the US dollar would be one of the larger beneficiaries as trading something like the AUD/JPY will have to worry about global trade tariffs and the like. I believe that this market will eventually make a fresh, new high, and when it does it will go looking towards the ¥112.50 level next, followed by the ¥114 level. Pullbacks should be thought of as buying opportunities.
USD/JPY Video 12.07.18
This article was originally posted on FX Empire
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