US Dollar Bounces From 50 Day EMA

The US dollar has bounced from the 50 Day EMA indicator during the early hours on Monday to show a proclivity to continue the same sideways grind against the Japanese yen. By doing so, the market looks as if it is trying to figure out whether or not it can stay in the same region, as we try to build up enough momentum to go higher. If we can break above the ¥116 level, then we can start to test the ¥116.33 level. That is an area where we have recently formed a little bit of a “double top”, and as a result, it is likely that the market is going to have a little bit of trouble there.

USD/JPY Video 08.03.22

On the downside, if we were to break down below the 50 Day EMA, then it is possible that the market could go much lower, perhaps reaching towards the ¥114 level. This is a market that has a lot of noise attached to it, due to the fact that the Japanese yen is considered to be a safety currency, and therefore a lot of people will be attracted to this market and the Japanese yen if there is a sudden huge “risk-off move” around the world. Keep in mind that the US dollar is also considered to be a safety play, so it does keep the downward momentum of this market somewhat in check.

In other words, if we see the Japanese yen strength in rather drastically during the session, it may do better against other currencies than this particular one. It is not that it cannot fall, it is just that it may not fall as far. With this, this market continues to be a “buy on the dips” type of situation.

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