The US dollar has rallied again during the day on Monday against the Japanese yen to show signs of strength. By doing so, we are threatening the top of the overall consolidation area that has been so important for so long.
The US dollar has rallied again against the Japanese yen during the day on Monday, as we are threatening the ¥111 level. This is an area that is resistance, so it will be interesting to see whether or not we can continue to gain at this point. If we do, then I think we go looking towards the ¥112 level, and then the ¥112.50 level. Those are all potential resistance barriers, but I also recognize that the impulsivity of this latest move certainly is something a bit more out of the ordinary than what we have seen over the last few months. With this being the case, we might be in the process of breaking out.
One of the biggest cases for a breakout would be the fact that the interest rates in America are rising in the bond market, and the differential between the two economies when it comes to the 10 year note has a huge major influence on where we go next. As long as we continue to see the interest rates in America rise, this is a pair that will almost certainly try to break out.
Otherwise, a pullback from here would make a certain amount of sense as the ¥110 level has essentially been the” fair value” of the market in general. At this point, you need to watch every ¥50 or so for signals, at least until we break above ¥112.50. Do not be surprised at all to see a little bit of a pullback, but it certainly looks as if the momentum is shifting more to the upside.
