The US dollar has pulled back against the Japanese yen rather stringently during the trading session on Thursday, as we continue to see a lot of volatility overall. The market seems to be erratic to say the least, but the one thing that seems to be holding it together is the ¥110 level. That’s an area that has been support and resistance in the past, so it does not surprise me at all that we have a bit of a bounce from there.
This will be an interesting pair to watch over the next several days, because we are seeing conflicting economic signals around the world. Quite frankly, this pair is sensitive to the global risk appetite in general, and of course interest rate differentials. The Japanese central bank is probably light years away from normalizing monetary policy, while the Americans are in the midst of doing so. Because of this, and if we can keep out of the headlines for once, it’s likely that the pair will continue to have a bit of an upward proclivity.
For myself, I believe that we will go looking towards the ¥111 level above, which has been resistance previously. Short-term pullbacks, like the one that we have just seen, should continue to offer opportunities for value hunters. I would be small in my position sizing though, because the volatility will probably be rather high, and of course headlines could jump in and work against you.
USD/JPY Video 22.06.18
This article was originally posted on FX Empire
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