US dollar gains against Japanese yen to continue rally on Tuesday

The US dollar has rallied a bit during the trading session on Tuesday, breaking towards the 110 level. That’s an area that is psychologically and structurally important on the longer-term chart, and if we can break above there I think the market is free to go much higher. This we based upon higher interest rates in America more than anything else, and although it looks as if we are getting ready to break out, I think that perhaps we need to pull back a little bit just to build up momentum yet again. After all, there has been extraordinarily amount of negativity above that continues to be difficult to break. Once we do though, this could take off rather quickly.

If we do pull back from here, I anticipate that the buyers will probably go looking at the 109 level as support. I think that it is only a matter of time before we find value hunters, and quite frankly after the recent action, I don’t have much interest in trying to short this market. I believe the hard “floor” in the market is somewhere near the 107.50 level, but obviously it’s going to take a lot to get down there. Quite frankly, I don’t think it will. I think every pullback will end up being a buying opportunity as we build up the necessary momentum to continue going much higher for the longer-term, as this pair continues to be extraordinarily volatile.