• The US dollar has fallen a bit during the course of the trading session on Thursday, but we continue to see plenty of buyers in this market.
• This is not a huge surprise, considering just how much of a difference there is in the interest rates of these 2 economies.
• The US dollar continues to get bought to mainly due to the fact that the interest rates are so high, while at the same time, the Japanese yen is shunned it due to its lack of interest rates backing it.

(Click on image to enlarge)

Technical Analysis

The technical analysis in this USD/JPY pair is rather bullish, but it has been somewhat sluggish over the last 2 weeks. We are currently hanging around the 50 Day EMA, which of course is a large, widely followed technical indicator by technical analysts and traders alike, so I find it interesting that we are hanging around here. The ¥155 level is an area that a lot of people would be paying close attention to as it is a large, round, psychologically significant figure, and an area that has seen a lot of action more than once.

All things being equal though, when I look at the chart it has been very bullish for some time, and although the Bank of Japan recently made some type of lip service of tightening monetary policy, the reality is they cannot tighten monetary policy enough to overcome the differential anytime soon. What this pair needs is either a major “rush toward safety” in the form of buying the Japanese yen, or they need the Federal Reserve to start cutting interest rates again. As for a choice between those 2, I think the Federal Reserve cutting interest rates suddenly is off the table, and it’s very possible that it might be off the table for the rest of the year based on the inflation issues that we continue to see here in America.

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