The US dollar rallied against the Japanese yen during the session on Tuesday, breaking above the 112 level. However, we did droop a bit during the day and I think we are now trying to find some support near the 112 handle. The 24, 48, and 72 hour moving averages continue to offer support. Alternately, a break above the recent high could send this market looking towards the 112.50 handle above. If we can remain above the 112 level, the market should then go higher, perhaps reaching towards the 115 level. This area of consolidation was rather significant and the past, and I believe that it will continue to be so. If we can break down below the 111.50 level, the market then should go looking towards the 111 handle.
The markets continue to be bullish and the short-term, but I think we are going to be at the whims and mercy of headlines around the world as this is a very risk sensitive pair. Currently, I believe that the treasury yields moving slightly higher will continue to favor the US dollar, but the Japanese yen of course retains its value as a safety currency. This market should continue to be of interest and of course volatile, but I believe that in the short term it looks likely that the buyers will be aggressive on dips, and it’s not until we break down below the 111 level that I’m comfortable selling again, as we would more than likely go looking for the 110-level underneath there. Pay attention to the ADP Employment Change numbers out of America, they can have an influence on this pair as well as they are a harbinger for the Nonfarm Payroll Numbers on Friday. The next couple of sessions after that announcement could be rather quiet though, as we await the official jobs figures.
Written by FX Empire