US Dollar Pulls Back Against Yen, Carry Trade Thesis Remains Intact
The US dollar has pulled back slightly against the Japanese yen on Friday, following several days of gains. According to Christopher Lewis, a technical analyst at DailyForex, this pullback is likely due to profit-taking and lower interest rates in America.
However, Lewis believes that the carry trade thesis remains intact, with the US dollar's high interest rate differential making it an attractive option for traders. He notes that the 3-3.5% interest rate spread between the US and Japan is significant enough to drive market movements.
The USD/JPY pair has been rallying over the past few trading sessions, but Lewis sees potential support at the 162 yen level, which has acted as a magnet for price in recent times. The 50-day EMA is also approaching this area, making it a key indicator to watch.