USD/JPY Forecast – The US Dollar Hangs Onto a Trendline

USD/JPY Forecast Video for 06.12.23

US Dollar vs Japanese Yen Technical Analysis

The US dollar was rather choppy during trading on Tuesday, as we continue to hang onto a significant trendline. All things being equal, this is a market that needs to make a decision for the next few months, as we are heading into the month of December, liquidity could be an issue. That being said, pay close attention to the idea that the liquidity could start to disappear, and that obviously causes some issues in and of itself.

If we do break to the upside, the initial barrier is ¥147.50. After that, then we are starting to look toward the highs of Thursday and Friday of last week, and the 50-Day EMA. Ultimately, there is a hard “ceiling” near the ¥149.80 level, which then opens up a move to the ¥152 level. Keep in mind this pair is paying a lot of attention to the interest rates in the United States, and specifically, the 10 year yield. With the jobs number coming out on Friday, there’s a really good chance that we will see a lot of volatility late in the week. Having said that, I think it’s probably only a matter of time before buyers continue to try to pick this market up in the short term, just due to the fact that we have been in such a huge uptrend, and of course you do get paid to hold US dollars against the Japanese yen via the swap at the end of the day.

That being said, if we were to break down below the hammer on the Monday session it opens up a move down to the ¥145 level, which is backed up just underneath by the 200-Day EMA indicator. The recent pullback has been a bit steep, and of course there’s been the usual rumors that the Bank of Japan might actually tighten monetary policy, but this is a game that we played multiple times in the past and I don’t think were anywhere near there. In fact, the question now is whether or not the Fed Funds Futures markets are correct, pricing in a 60% chance of a rate cut in America as soon as March.

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