US Dollar Continues to Reach Ever-higher

US Dollar vs Japanese Yen Technical Analysis

The US dollar has fallen just a bit during the trading session on Friday, but it looks as if the ¥130 level is continuing to attract a certain amount of attention. Because of this, it is very possible that we continue going higher, despite the fact that the yen is oversold by just about any measure you use. This is because the Bank of Japan has essentially “thrown in the towel” when it comes to trying to defend the yen because they are far too focused on bond yields at the minute. Japan is in a very untenable position because it cannot higher interest rates as they are so heavily indebted.

In this scenario, the Japanese yen could be eviscerated. Whether or not the central bank will do this forever is a completely different question, but it is clear that they are stuck with two very painful decisions. Because of this, it looks as if the Forex markets are more than willing to take advantage of the situation. It is not until we break down below the ¥125 level that I would be concerned about the trend, and as we have broken above massive multi-year resistance recently, I anticipate that we have much further to go to the upside.

At this point, I suspect that this is going to be a “buy on the dip” trade for quite some time. Quite frankly, as long as it remains somewhat orderly, I imagine that the Bank of Japan will have to deal with it. The speed of the move certainly needs to slow down, but if we can create a stable uptrend, it will probably make everyone happy.

USD/JPY Price Forecast Video 02.05.22

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