The US dollar has rallied a bit during the course of the trading session on Monday to reach the crucial ¥118 level. On the monthly chart, the ¥118 level is an area where we had seen a swing high, so one would assume that there is a certain amount of resistance just waiting there. The market of course is moving mainly due to the interest rate differential at the moment, and the fact that the Federal Reserve has a meeting this week could come into play. The market has gotten a bit stretched at this point, so a pullback would make a certain amount of sense. That being said, we are most certainly in an uptrend.

USD/JPY Video 15.03.22

The ¥116 level underneath should be supported, based upon the fact that it was previous resistance. The 50 Day EMA sits just above the ¥115 level and is starting to curl higher, so therefore it should also offer a bit of dynamic support as the market pulls back. Either way, I have no interest whatsoever in trying to short this market, because it is obviously in a strong uptrend and this most recent push has been very violent.

A lot of this will probably come down to what the Federal Reserve says on Wednesday in its statement, and whether or not it sounds like it is going to remain hawkish. If they do step back a bit, that could send the US dollar falling for a while, but if they remain hawkish, that could be what finally has this market breaking out for a longer-term “buy-and-hold” scenario.

For a look at all of today’s economic events, check out our economic calendar.

This article was originally posted on FX Empire


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