USD/JPY Forecast – US Dollar Continues to Rally

US Dollar vs Japanese Yen Technical Analysis

The dollar rallied early on Friday against the yen as we continue to see the interest rate differential drive this pair. Ultimately, this is a market that I think given enough time, will eventually try to go to the upside and break above the recent sell off.

And it is possible at this point that what we are getting ready to see is more or less some type of consolidation move. After all, this is a market that had shot straight up in the air and has since had to deal with central bank intervention. That, of course, scares a lot of traders, but the reality is that intervention at best can slow down a move, not work against it completely.

It’s very rare that it changes the overall trend. So with that being the case, I like the idea of taking advantage of the dips as buying opportunities. And I think the ¥155 level, followed by the 50 day EMA, both come into the picture to offer plenty of support. Ultimately, I do think that we go higher, and I do think that eventually we go looking to the ¥160 level.

That being said, it doesn’t mean it’s going to be an easy ride, and you are going to have to understand that this might be more of an investment than a trade at this point, at least until we get some type of momentum. I have no interest in shorting this pair as you have to pay in order to do so, and the interest rate difference is far too much to overcome at the moment.

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