The US dollar had a negative session on Tuesday, but found enough support at the 113 level to keep me interested in going long. This is an area that previously offered resistance, so it should now offer support. I believe that the market will eventually reach towards the 113.50 level, and then higher than that. We have pulled back significant as of late, but the massive moved to the upside should continue to be the way we go going forward as long as the central bank outlook remains the same. The Federal Reserve looks likely to raise interest rates a couple of times later this year, while the Bank of Japan is nowhere near doing so. Because of this, I feel that the market is offering value on these dips, but I also recognize there is a lot of noise just above current trading levels. This is more of a longer-term trade, and you will have to be able to deal with the volatility.
The 114 level
Once we clear the 114 level, I think that the market will then go to the 115 level, and it’s going to take a significant amount of work to get there. However, if you can keep your position size somewhat small, it will make it much easier to deal with what is almost undoubtedly going to be a volatile marketplace over the next several weeks. You should also remember that this market is highly sensitive to risk appetite, and that will be reflected in the stock markets. The longer-term uptrend should still be intact, and therefore I don’t have any interest in selling. I believe that there is a massive amount of support just below the 113 handle. Currently, I don’t have a scenario where I’m selling this pair.
Written by FX Empire