The candlestick for the trading session on Wednesday looks a little bit like a shooting star, so exhaustion could be coming back into the picture.
The US dollar rallied initially on Wednesday to make a fresh, new high. However, the ?138 level has caused a little bit too much in the way of resistance, so I think we may have a little bit of a short-term pullback coming. That pullback should be a nice buying opportunity, especially near the ?136 level. Ultimately, this is a market that has been bullish for some time, so I think we are likely to see a lot of volatility on short-term pullbacks.
The yen is a popular asset during turbulent times.
That being said, keep in mind that the Bank of Japan continues to fight interest rates rising, and therefore I think it’s probably going to be a situation where the Japanese yen gets hammered due to the fact that we are going to see the value hunters come back into this market every time they get an opportunity. After all, the Federal Reserve will more than likely continue to be hawkish, especially with the uptrend line underneath from a technical analysis standpoint. Ultimately, I have no idea where we are going to see sellers come again, but it would obviously have something to do with the Federal Reserve changing its attitude, and perhaps even the Bank of Japan doing the same.
What’s interesting is that Japan has finally found a little bit of inflation for the first time in 40 years, so we could see a little bit of an attitude change, but it’s not going to be anytime soon. After all, the massive amount of debt that Japan is in would break the entire economy if we started to see interest rates rise drastically.
At this point, we may get a little bit of a short-term pullback, but ultimately, it’s likely that it will only offer a bit of an opportunity. The 50-day EMA sits just below the uptrend line, and it’s likely that we will continue to see that paid close attention to, so I think you should look at that as a dynamic support. Looking down below that would be rather interesting, and it’s likely that we would see a bounce given time. The candlestick for the trading session on Wednesday looks a little bit like a shooting star, so exhaustion could be coming back into the picture.