USD/JPY Price Forecast – US Dollar Pulls Back to 50 day EMA Before Shooting Higher

The US dollar has initially pulled back a bit during the course of the trading session on Tuesday as we continue to see choppy behavior. That being said, I do think that it is probably only a matter of time before we continue the general upward momentum. In fact, you could make a little bit of an argument for an ascending channel, as the market has been grinding away.

USD/JPY Video 26.05.21

The recent pullback in this pair has a lot to do with the fact that it had been so overbought. These things happen occasionally, but it does not change the overall outlook. Keep in mind that the risk appetite and the bond markets will have their part of play in this pair, and as long as there is a major differential between the United States and Japan when it comes to bond yields, I do think that it is a scenario where we continue to buy the dips.

Furthermore, the ¥108 level is an area that we need to pay close attention to, as it is where we had seen the 50 day EMA come into play and of course the 38.2% Fibonacci retracement level. I think that is essentially your “floor in the market.” To the upside, I anticipate that the ¥110 level will have a certain amount of psychology involved in it, perhaps making it a bit difficult to break above. Nonetheless, I do think that we have the ability to break above there, but it is probably more of a longer-term thing as I think we continue to see a lot of choppy back-and-forth trading.

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