Dollar Rally Continues Amidst Hot PMI Numbers and Interest Rate Differentials

The US dollar is experiencing a rally against several currencies, including the Japanese yen (USD/JPY), Canadian dollar (USD/CAD), and Swiss franc (USD/CHF). This uptrend can be attributed to hotter-than-expected PMI numbers. The Bank of Japan and Federal Reserve's intervention has also played a role in this development.

According to technical analysis, the USD/JPY is trading around 157.493 and pulling back towards the 155.000 level after slipping below its 50-day EMA. To break above the 200-day EMA would be a very bullish turn of events, as it has been a key resistance level.

The hammer from the previous session suggests real support near the 155-yen level, but breaking down below this could open the floodgates for further declines. Carry traders continue to hold onto the dollar against the yen due to interest rate differentials, which entice them with payouts at the end of the day.

In contrast, the USD/CAD is holding above both its 50-day and 200-day EMAs, trading around 1.40630. This pair is in the midst of forming a double bottom, which could push it towards the upside, possibly towards 1.4150 again. The 38.2% Fibonacci retracement level has been tested twice and found supportive.

The USD/CHF is slightly negative against the Swiss franc but only barely so, trading around 0.80920. It appears to be forming a double bottom as well, similar to the USD/CAD pair. This market seems attracted to the 0.8150 level, which has been supported by the Swiss National Bank's efforts to keep the Swiss franc weak.