USD/JPY Forecast – US Dollar Attempts to Break Out

Christopher Lewis
Published: Sep 20, 2023, 14:25 GMT+00:00

The US dollar rallied during the trading session on Wednesday as we waited for the FOMC results later in the day.

US Dollar, FX Empire

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USD/JPY Forecast Video for 21.09.23

US Dollar vs Japanese Yen Technical Analysis

The US dollar tried to rally during the trading session on Wednesday as we wait for the results of the FOMC meeting. At this point, it looks like the market continues to see a lot of noise out there, and therefore it makes quite a bit of sense that we would see a lot of back and forth. All things being equal, the market looks as if it is trying to get above the ¥147.80 level, which of course is an area that we have seen a lot of noise at over the last couple of days.

All things being equal, it looks like the interest rate differential will continue to be a major driver over we go, but you also have to keep in mind that the FOMC will cause a lot of noise, but we also have the Bank of Japan interest rate decision on Friday, so there should be plenty of volatility over the next couple of days. As things stand, I think you continue to see buyers on dips, but the Bank of Japan could try to jawbone this pair lower. All things being equal, this is a scenario where we could see a strong pullback, but that pullback should be a buying opportunity. Even if the Bank of Japan were to go out of its way to tighten monetary policy and raise interest rates 25 basis points, it still leaves about a 500 basis point differential between the 2 currencies, so therefore I would be more than willing to take advantage of “cheap US dollars.”

If we break above the top of the candlestick for the Wednesday session, then it opens up a move toward the ¥150 level, but it doesn’t necessarily mean that it will be easy. In general, I think this is a situation where you probably continue to go higher over the longer-term, but at this point we have to determine whether or not we get some type of pullback that we can take advantage of, or if we can simply continue to go higher. In general, this is a market that I think you continue to look higher, but the question is whether or not you can find some value.

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About the Author

Being FXEmpire’s analyst since the early days of the website, Chris has over 20 years of experience across various markets and assets – currencies, indices, and commodities. He is a proprietary trader as well trading institutional accounts.

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