The US dollar rallied a bit during the trading session on Thursday, breaking above the ¥111.50 handle. That is the beginning of significant resistance that extends to the ¥112 level, so I think it’s going to take a certain amount of momentum building to make that happen. With this in mind, I suspect that we will get a short-term pullback but the 200 day EMA, pictured in black on the chart, looks very likely to continue to offer support, so I like buying pullbacks at this point for small gains. If we can break above the ¥112 level, the market will more than likely go looking towards the ¥113.50 level.
USD/JPY Video 15.03.19
Keep in mind that this pair tends to move right along with the S&P 500, which currently has a ton of resistance just above. If the market can break out it will more than likely drive this one right along with it. Obviously, the alternate scenario is possible as well, as the S&P 500 could break down and have people looking for safety in the Japanese yen. If that happens, a break down below the red 50 day EMA could unwind this market down to the ¥110 level, possibly even ¥108 after that.
All things being equal we have an uptrend that is tenacious, but at the same time we have a lot of resistance above. That makes the USD/JPY pair one of my least favorite right now, but certainly one that is worth paying attention to, as we are at a major inflection point.
Please let us know what you think in the comments below
This article was originally posted on FX Empire
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