Dollar Pulls Back Against Yen Amid Intervention Fears
The US dollar has pulled back against the Japanese yen in early trading on Monday, as traders shied away from a potential intervention area around the 160 yen level. The pair had dropped below this threshold but buyers have since come back in to support the US dollar.
According to Christopher Lewis, a technical analyst at DailyForex, the Federal Reserve's hawkish stance is still a major issue for the market. While the Bank of Japan has intervened in the market a couple of times, it hasn't been enough to change the trend and most of the time it isn't.
Lewis notes that traders are paying close attention to the interest rate differential and Japan's massive debt problem, which makes it difficult for the country to raise rates significantly. He believes that in the long term, the market should continue to favor buyers as the swap pays nicely at the end of the day.