USD/JPY Forecast – The US Dollar Breaks Through a Trend Line

USD/JPY Forecast Video for 02.12.22

US Dollar vs Japanese Yen Technical Analysis

The US dollar has fallen quite hard during the trading session on Thursday as the world waited for the Core PCE numbers. With the resulting reading of 0.3% month over month, the US dollar continues to see downward pressure. However, we also have the jobs figure coming out Friday, so at this point in time it’s very likely that we have a certain amount of noise ahead.

Whether or not we can continue to see Japanese yen strength will be a completely different question, but at this point it looks as if we are going to certainly try. Ultimately, the 200-Day EMA will capture the attention of a lot of people, so I do think that we’ve got a scenario where the next couple of days should be crucial. In this environment, I would fully anticipate that the market participants will be very quick to make a move.

If we break down below the 200-Day EMA, and by extension the ¥135 level, then we could start to see the entire trend unwind. This would be a huge signal that the US dollar is losing favor overall, as the Japanese yen itself is a rather weak currency. However, if interest rates continue to fall around the world, that may provide Japan with enough air cover to finally calm down on its printing, and therefore the yen may be a winner by default.

We will have to wait to see how this plays out but clearly, we are at a major inflection point, and we are about to make some pretty big decisions. If and when we do, I believe that the next move is going to be rather big. Keep in mind that a lot of volatility out there may come into play over the next 2 days.

For a look at all of today’s economic events, check out our economic calendar.