The US dollar softened a bit at the beginning of the session on Monday, but then turned to the upside yet again. It looks as we are going to challenge the 111 handle, and I do believe that we break above there. This is predicated mainly upon the stronger than anticipated jobs number in America, as this pair tends to be very highly leveraged to the 10-year bonds from both countries. Interest rates should be going higher in the bond markets now that it appears that the Federal Reserve will be forced to raise interest rates, that Accor should work in favor the US dollar. The Japanese yen of course is everybody’s favorite funding currency, so with the ultralow rates coming out of Tokyo it makes sense that we extend the gains and I believe that the next target is probably the 112.50 level above, which has been interesting as of late.
Buying the dips
I continue to buy the dips in this pair, believing that every time that it drops, it offers value. The US dollar is starting to beat up on several currencies, not only the Japanese yen. The Canadian dollar has been absolutely shellacked over the last couple of days, and that should continue to be the case as well as it is interestingly enough a bond play between Canada and the United States also. I believe than the 110 level now should act as a bit of a floor in this pair, and I believe that we will continue to grind her way to the upside. Four months, we have been trying to change the overall downtrend in this pair, and I believe we are finally starting to see the resiliency needed to continue the uptrend, perhaps four months if not years for those who are patient enough to hang onto the strayed.
Written by FX Empire