USD/JPY Forecast – The US Dollar Gives Up Early Gains

USD/JPY Forecast Video for 08.12.22

US Dollar vs Japanese Yen Technical Analysis

The US dollar has rallied a bit during the trading session on Wednesday, to reach the ¥137.50 level. That’s an area that previously had been supported, and therefore it does make sense that there’s a little bit of “market memory” in that area, that perhaps could cause resistance. By pulling back, we begin to ask a couple of questions, not the least of which would be whether or not the 200-Day EMA can hold. If it cannot, that would obviously be very negative, and it could send the US dollar crashing against the yen.

Most of this is going to be about the interest rate situation around the world, as the Bank of Japan continues to be very aggressive in fighting rising range. If rates start to fall, then it helps the Japanese fight that situation, therefore it relieves some of the pressure on the Japanese yen itself. After all, they don’t have to worry about whether or not they have to print “unlimited yen” to fight rates from rising. If we turn around and break above the top of the candlestick though, that would probably be a sign that they are losing that fight again, and that this pair could go to the ¥140 level, to retest the previous trendline.

On the other hand, if we break to a fresh, new low, that could be very negative for the US dollar, and I think you would probably see that across the FX markets as a theme, US dollar weakness. Nonetheless, I think you are going to see a lot of noisy behavior in the meantime.

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