• The US dollar initially did try to rally it during the trading session here on Wednesday to test the 200-day EMA.
• That being said, we turned around to show signs of hesitation, and at this point, it's probably worth noting that the market is basically hanging around between the 200-day EMA and the 50-day EMA.

More importantly, I think what you need to keep in mind is that the 148 yen level above is an area that has been difficult to crack. And if we did do that, then I think you have a very real shot at this market going higher. Ultimately, the 151 yen level gets targeted. On the other hand, though, if we turn around and break down below the 50 day EMA, then it's possible that we could look into the 146 yen level, opening up the possibility of even deeper corrections.

But I do think that the 146 yen level is an area where we would see a lot of support. If we break it, then that changes my opinion. But as things stand right now, we essentially have a scenario where the interest rate differential still favors the United States.
 

Swap Will Matter Long Term
 

(Click on image to enlarge)

So, then I think you've got a situation where if you are willing to wait to get paid, you probably will. After all, you'll be collecting swap at the end of every day. And I think a lot of institutional traders do prefer this. That being said, there are concerns about whether or not the Federal Reserve will have to cut multiple times. But right now, the economic numbers aren't good for the United States, but they're not horrible either.
 

That sets up the market for perhaps an ugly surprise later this year. We'll just have to wait and see. This has been a brutal four or five days in the sense that we look like we were ready to go much higher and then just crash, but now we're stable. And that's generally the first sign of the market turning back around.

More By This Author: