• The US dollar rallied higher against the Japanese yen yet again during the trading session on Wednesday, as upward pressure continues.
• All things being equal, this is a market that is likely to see a lot of upward momentum, although it might be getting just a little bit stretched at the moment.
   

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With this being said, the market still remains a buy-on-the-dip type of scenario, with the ¥153 level being a massive floor in the market. If the pair continues to the upside, the target at this point is somewhere closer to ¥159, although there is recognition that as the market approaches the ¥156.50 level, it is facing a little bit of resistance.
 

Longer-term, This Resistance Isn’t a Huge Deal

Over the longer term, this is unlikely to be a big deal. Short-term pullbacks should be thought of as buying opportunities, and this should be viewed through the prism of staying long in this market as the interest rate differential pays at the end of every day.

The Bank of Japan is very unlikely to be able to tighten monetary policy, and with that, plenty of participants appear willing to grind to the upside in this pair and continue to hang on to the interest rate differential and the swap payment at the end of every day.

There is absolutely no interest in shorting the US dollar against most currencies, and most specifically not against the Japanese yen. Across the forex world, most yen-denominated pairs look the same. Because of this, the markets all look as if they are selling off the Japanese yen, and this pair will be the biggest barometer of yen strength or weakness.

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