US Dollar still strong, but is this development still healthy?

No matter what currency pair we look at right now, the US Dollar remains strong against all the major pairs. Although, technically speaking, a counter-reaction would have been expected for most currency pairs long ago. The greenback simply does not want to fall. The reason for this is the positive economic data that is released almost daily from the US. Whether we like US President Donald Trump or not, his controversial policies have helped to make the US economy better. The numbers don’t lie and the US stock markets are chasing one all-time high after another. The Dow Jones closed yesterday with another 0.94% gain (here is a recent commentary on the all-time high in the Dax).

The dangerous coronavirus seems to be receding more and more into the background. Shareholders have already become used to the pandemic and will not let the bad news from China affect their good mood. For Donald Trump, too, the euphoric markets are the water on his mills and he will certainly use the positive figures cleverly for his election campaign. Slowly, however, we are getting into the area where the strong US Dollar can also have a negative impact on US exports. The experts are already warning of this and their voices are getting louder. Donald Trump is no friend of the strong US Dollar either. If things continue like this, he will certainly be critical soon.

The 110.00 mark is in sight for the US Dollar vs. the Yen

Looking at the current situation in the USD/JPY (see chart below), it is quite clear that there is an exemplary uptrend here as well. The US Dollar is strong and is currently attempting to regain the important resistance level of 110.00. However, the first attempt yesterday failed. The price tested the resistance briefly and even reached the price of 110.11 in the high, but then the follow-up orders on the long side were missing and the pair slipped below 110.00 again.

Currently, the US Dollar is in the range of about 109.80 against the Japanese Yen (Thursday morning). It will be interesting to see if there will be another attack on the last high today or if we will see a correction first. At 109.74, there is important support for the USD/JPY on the chart and as long as it can hold, the long side can continue to be favored. However, should this break, we will probably see some lower prices. The next price target is then at 109.43. Here the 38.2% Fibonacci retracement is waiting for the US Dollar.

Short-term indicators

As the short-term indicators are exhausted, a slight correction on the downside should take place first. This does not mean, of course, that we will see a reversal of the trend. Once the price has corrected, there will be good opportunities for a long entry. The USD vs. the Yen is one of those currency pairs that likes to develop long and stable trends. The bulls know this and will not give up this good source of income so quickly. Every price slide is used to place new buy orders in the market. The current strength of the US Dollar also fits well into the picture. So anyone who thinks in the short term can dare a small short trade today. Nevertheless, they can do so in the knowledge that the general direction is still pointing upwards. Currently, we should also pay attention to the correlation with the EUR/USD, where the US Dollar continues to show its strong side.

US-Dollar vs Yen Chartverlauf

The analyses shown here do not constitute investment advice and are therefore not a recommendation to buy or sell a security, a futures contract or any other financial instrument. Past performance is no guarantee of future results. The analyses provided are for information purposes only and cannot replace an individual consultation. Liability for direct or indirect consequences of these suggestions is therefore excluded.

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