Richard Perry
Independent Analyst
What a move on the dollar! The acceleration in Dollar/Yen higher towards the key April high at 104.12 has been remarkable. Now comes the tricky bit, what happens next. The problem is that the dollar has had a bout of strength three or four times in the past 6 months. Each time traders think that it will be the big breakout, only to be met by a sharp retracement. The latest move does have a different feel to it though. In the past, the RSI has struggled to really gain momentum, but this time it has pushed well above 70 to a level not seen since February 2013. This is not something that tends to be seen in sideways range markets and is more a feature of a strong trend. Whilst the indicator may be looking stretched and this could induce some consolidation, holding support above the breakout at 103 is now key. There is minor intraday support around 103.60 and 103.20. The test will now be how the rate reacts to Janet Yellen in her speech tomorrow as it is likely to retain a dovish tone and could induce some profit taking. Quite how much profit is taken out of the rate will determine whether the bulls remain in control this is just another spike higher that will be entirely retraced.
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