The US dollar has initially pulled back during the trading session on Tuesday but found enough support underneath the turn around a break back to the upside. The market looks as if it is going to try to get to the ¥110 level again, which is where we have seen a significant amount of resistance. Keep in mind that the market has been chopping to the upside, and certainly seems to be rather resilient as bond yield differential between the two economies should continue to favor a move to the upside.

USD/JPY Video 02.06.21

Furthermore, this pair does tend to react to overall risk appetite around the world, which currently is somewhat favorable. If we can break above the ¥110 level, then it is likely that the market will continue to go much higher, perhaps towards the ¥111 level after that. Ultimately, I do think that this market gets there but that does not necessarily mean that it is going to be easy, nor will it be quick.

To the downside, I think there is plenty of support near the ¥109 level, and of course the 50 day EMA. The 50 day EMA is an area that a lot of traders pay attention to, and it must be noted that over the last couple of months it has been somewhat reliable. Because of this, I think there are a certain amount of traders out there that would be simply waiting for a pullback to that indicator in order to get involved as well. Regardless, I do not have a scenario in which a willing to sell this market, at least not right now.

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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