USD/JPY Forecast – US Dollar Continues to See Upward Pressure and Massive Swings

US Dollar vs Japanese Yen Technical Analysis

The U.S. dollar has been all over the place against the Japanese yen during the trading session on Monday, as the continuation of the uptrend took off right away at the opening bell in Asia. But then in the middle of the European session, we saw the whole thing fall apart to slam through the bottom of the presumed consolidation at the ¥155 level, only to turn around and bounce just as violently.

In other words, we are starting to see massive swings in momentum. And although some people had worried about the possibility of Bank of Japan intervention, it is not appear that was the case. Quite frankly, this might just be a situation where there was a huge liquidity pack and they got triggered. Nonetheless, this is a market that is still very much in an uptrend.

And I do think that given enough time, we continue going higher. However, you can’t necessarily look at this through the prism of a market that you can short. It should go higher over the longer term. But we had gotten so far ahead of ourselves. A little bit of volatility does make a certain amount of sense. The interest rate differential continues to be very wide, and therefore you get paid to hang on to this pair.

So ultimately I do think this market goes higher and it eventually goes looking to the ¥160 level. But really at this point in time, it may be in the midst of trying to slow things down, which is fine. It just makes the rally more sustainable in the end.

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