USD/JPY Forecast – US Dollar All Over the Place Against the Yen

USD/JPY Forecast Video for 31.07.23

US Dollar vs Japanese Yen Technical Analysis

The US dollar has been all over the place against the Japanese yen during trading on Friday, as the Bank of Japan has decided to loosen monetary control, allowing the yield curve control to flex all the way to the 0.5% level, which of course has people wondering whether or not they are going to change their policy. At the end of the day, it is still a positive swap to hold US dollars against the Japanese yen, and therefore we have been all over the place, but it looks like traders are starting to focus on the positive swap again.

I do believe that this pair goes higher eventually, but it’s also worth noting that the volatility has shaken a lot of people out. At this point, the ¥138 level continues to be a significant floor, and quite frankly an area that I think will continue to attract a lot of attention as it has previously proven itself to be important not only from a support perspective, but also from a resistance perspective.

Looking at the candlestick, you can see just how confused the market is, and how little traders know what to do with themselves. When you look at the longer-term trend, it becomes a little clearer but I don’t necessarily think that it’s going to be an easy shot higher. I suspect that you probably have a lot of back and forth in this area and the fact that the 50-Day EMA is slicing through this region also causes a lot of noise, as it attracts a lot of mechanical trading.

If we can break above the ¥142.50 level, then it’s likely that the US dollar will go much higher, but I anticipate in the short term we will probably continue to see more consolidation than anything else, as there just is no real momentum in one direction or the other. If we were to break down below the 200-Day EMA, just below that crucial ¥138 level, then it could send the pair much lower, but that looks very unlikely after overnight action.

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