US Dollar vs Japanese Yen Technical Analysis
The US dollar has fallen a bit during the trading session after initially trying to recover against the yen as the Bank of Japan has raised interest rates by 15 basis points or so. It does make sense that the yen rallied a bit, but ultimately, we have a situation where the interest rate differential still most certainly favors the US dollar.
And therefore, I think you have to look at this through the prism of a market that will more likely than not turn around. However, we also have the Federal Reserve ahead in the late hours of the day, and we have to be aware of the fact that things could change quite rapidly. So, with that, I am a bit cautious, and I’m basically waiting to see how this closes for the day.
If we have a situation where the market ends up bouncing hard from here, then I think that tells you that the sell-off is short-lived, and it is more likely than not to be a scenario where traders are willing to come in and take advantage of that interest rate differential. The Federal Reserve may sound ultra dovish and that could change some things. We’ll just have to wait and see. But as things stand right now, I have more of a bias to look for buying opportunities in this area. With this, I am just cautiously optimistic, but I’m hanging out on the sidelines to see how the day ends. If we end closer to 152 yen, I think that’s a really positive sign.
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This article was originally posted on FX Empire