US Dollar Testing Recent Highs Against the Japanese Yen

US Dollar vs Japanese Yen Technical Analysis

The US dollar has rallied again during the trading session on Wednesday as we continue to threaten the recent highs again. It is worth noting that the ¥125 level is an area that is important, as it has been massive resistance multiple times in the past. Because of this, the ¥125 level is a very interesting place to see this action. It appears that the market is trying to build up a certain amount of momentum to finally breakthrough there.

Ultimately, we could pull back rather drastically but right now the market is not showing signs of that. I believe that there should be a significant amount of support near the ¥122.50 level, and then again at the ¥121.50 level. Both of those areas are temporary support and could be the bottom of what could be a bullish flag that we are trying to form. Ultimately, we are on the precipice of a major battle, one that will determine the overall trend of this market for the next several months.

Interest rate differentials between the United States and Japan continue to widen, mainly because the Bank of Japan has to print yen in order to fight interest rates going higher in that country. The Japanese central bank is one of the most dovish central banks in the world of finance, at least when it comes to major economies. You are seeing that play out in the currency markets right now, as the Japanese yen has been like a punching bag for almost every currency. This chart looks like a “buy on the dip” type of situation, and certainly one that I would not be a seller of, at least not yet.

USD/JPY Price Forecast Video 07.04.22

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