(MENAFN- Daily Forex)

• I analyze USD/JPY's continued strength, noting resistance near ¥154–155 and support at ¥153.
• With interest rate differentials favoring the U.S. dollar and Japan's ongoing quantitative easing, I expect further upside toward ¥160 on pullbacks.

The U.S. dollar has shown itself to be stronger against the Japanese yen during the trading session here on Monday as we are trying to break above the ¥154 level, but it's probably going to take some type of external pressure or whatever to get this pair going higher. If we finally clear the ¥155 level, then I think you've got a real shot at this market taking off to the upside. And if it does, then we really get moving much higher.

Support Below

That being said, I think you also have to keep in mind that the ¥153 level offers support, and it's an area that previously had been resistance. When I look at this, I think market memory coming into play makes a certain amount of sense. The interest rate differential, of course, favors the U.S. dollar against the Japanese yen, and I think it probably will going forward.

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Ultimately, this is a market where the interest rate differential really makes the difference, and with this being the case, I think it's probably only a matter of time before we see the market really take off toward the ¥160 level.

EURUSD Chart by TradingView

This is especially true as the Bank of Japan has no real hope of cutting the quantitative easing trajectory that they've been on for decades. The Federal Reserve has recently suggested that the rate-cutting cycle may not be as aggressive as the market has been pricing in, and therefore, I think you've got a situation where it's a bit of a perfect storm. So, at this point, I do like this market on dips, as I think it gives you value that you can take advantage of from time to time.

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