• The dollar has rallied again against the Japanese yen and what would have been a very, very choppy market.
• We had a couple of negative economic numbers coming out of the United States, which of course had all of the machines freaking out.
• But eventually the adults came back and realized that these are just a couple of data points. It’s not the end of the world.
• However, for a minute there during the day you would’ve thought the whole world was coming undone.

Ultimately, this is a market that I think will try to go higher over the longer term as the interest rate differential continues to favor the United States dollar over the Japanese yen hand over fist. The 158 yen level is an area that’s a bit of a barrier due to the previous central bank intervention so therefore I think you will have to watch that closely as well.

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Short term pullbacks continue to be buying opportunities that I think you will be taking advantage of, and therefore, I look at this from the prism of a market that is doing everything it can to offer plenty of opportunities to get long. But I also recognize that we are in the midst of trying to build up the amount of pressure necessary to finally break out. The 160 yen level being captured and broken through would be a huge victory for the bulls. That could send this market much higher.

Support Below at Several Areas

Underneath the 155 yen level and the 50 day EMA both come into the picture around the same area and could be a short-term floor. Anything below there could have a deeper correction but right now I still think that the US dollar is a buy against the Japanese yen and pullbacks like we’ve seen over the last couple of days just end up being opportunities. After all, you continue to get paid to hang on to this USD/JPY pair, and that’s something that institutional traders will pay close attention to.

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