USD/JPY Forecast – US Dollar Balances After Initial Fall

USD/JPY Forecast Video for 03.08.23

US Dollar vs Japanese Yen Technical Analysis

The US dollar has initially pulled back a bit during the trading session on Wednesday, but the ¥142.50 level has offered a bit of support yet again, an area that has been important previously. Because of this, it looks like the market is trying to continue the overall uptrend, and most clearly the Bank of Japan has found itself in a situation where the market isn’t even bothering to pay attention to it for very long. They recently stated that they were going to fight against the depreciating yen, and then stepped directly into the bond market and started buying again, which of course drives yields down, and makes the currency less attractive.

Furthermore, the Federal Reserve is likely to remain very tight with its monetary policy going forward, and therefore is likely that the US dollar will continue to be strong, despite the fact that Fitch downgraded US debt overnight. All things being equal, this is a market that I think continues to see a lot of noisy behavior, but I think this remains more or less a “buy on the dips” type of situation. Underneath, we have the 50-Day EMA, which is closer to the ¥140.50 level and is rising.

If we can break above the ¥145.50 level, then the market is likely to continue to go looking to the ¥150 level. All things being equal, I think we have a situation where the markets will continue to see a lot of resistance there, but if we can break above that level, then it’s likely that the US dollar will climb toward the ¥150 level. All things being equal, this is a market that I think continues to see a lot of noisy behavior, therefore it’s likely that we will see more of a “value hunting” type of situation, and with that being said, the market is likely to see as important. The ¥138 level underneath is significant support, as it was previous resistance for the massive ascending triangle that we broke out of previously, and of course we have the 200-Day EMA right around that same area as well. In general, expect volatility but with the jobs number coming out Friday, it’s likely that we will continue to see a lot of erratic trading.

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