(MENAFN- Daily Forex)

• The US dollar continues its steady climb against the yen as strong buying pressure holds the pair above key support.
• Interest-rate differentials and Japan's loose policy backdrop favor further upside, with pullbacks still viewed as buying opportunities.

The US dollar initially pulled back against the Japanese yen, but we have seen quite a bit of buying pressure during the trading session to turn things around. We are well above the ¥155 level, an area that has been important multiple times. Now that we are breaking above there by about 60 pips, I do think that we have much further to go and eventually could go looking to the ¥158.50 level.

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Short-term pullbacks offer buying opportunities in this market, as it is a nice uptrend that has been going on for quite some time. Quite frankly, the Japanese are likely to be very loose with monetary policy going forward from the new government. With that, I think the interest-rate differential will continue to be the main driver of this market higher. There is a shortage of US dollars around the world, and whether or not Japan is short remains to be seen, but it does not really matter.

Floor in this Market

All things being equal, this is a market where the ¥153 level is your floor. The 50-day EMA is racing toward that area. As you get paid at the end of every day to hold this pair to the long side, that is all I have been doing for several months now, and this is a reasonable amount of my portfolio. It is a nice investment. It is the carry trade that Forex markets tend to rely on over the longer term.

EURUSD Chart by TradingView

Anytime we pull back, you have to look at it as a potential buying opportunity. There is nothing on this chart that even remotely suggests that we should be shorting this pair. It is a nice, gentle grind higher. It is relentless, and that is exactly what you want to see-not exuberant buying, but a nice steady grind to the upside that continues to defy gravity in a slow and controlled manner. I do believe this pair goes much higher.

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