US Dollar Continues to Consolidate Against the Japanese Currency

US Dollar vs Japanese Yen Technical Analysis

The US dollar has gone back and forth during the trading session on Monday, as we continue to see a lot of choppy behavior in this general vicinity. The market has been very noisy in this general vicinity, which makes quite a bit of sense after the massive move higher. After all, markets cannot go straight up in the air forever. With that being the case, it makes sense that the market would continue to see a little bit of hesitation.

If we were to break down below the ¥121.33 level, it is possible that the market would go looking toward the ¥120 level. That of course is a large, round, psychologically significant figure, which attracts quite a bit of attention. Furthermore, we have the 50 Day EMA that has just broken above the ¥117.50 level looking to get to the ¥120 level. With that in mind, it does make a certain amount of sense that the area could end up being a bit of a battlefield. The market is overstretched, so I do think that a little bit of a pullback would make quite a bit of sense. After all, markets do tend to crash rather hard when they get as overstretched as we are at the moment.

As long as the Bank of Japan has two continue to flood the market with liquidity to keep yields down, that will put the Japanese yen on the back foot. However, we have recently touched a major resistance barrier going back multiple years in the form of the ¥125 level, so I think even if we were to break out, it is going to take a significant amount of effort.

USD/JPY Technical Analysis Video 05.04.22

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