USD/JPY Forecast – US Dollar Bounces

USD/JPY Forecast Video for 13.12.23

US Dollar vs Japanese Yen Technical Analysis

The US dollar has rallied after initially plunging on Tuesday, testing the ¥145 level. This is a market that I think will continue to be of importance, and therefore it will be interesting to see how this plays out. Given enough time, I think the US dollar reaches the ¥147.33 level, but we also have to get through the central bank meeting on Wednesday with the Federal Reserve. The statement will be parsed for any hopes of loose monetary policy, because after all that is what Wall Street wants.

If we do see loose monetary policy or at least the idea of it coming out of the Federal Reserve, we could drop down to the 200-Day EMA, which sits right around the ¥143.50 level. The fact that we formed a massive hammer there during the trading session on Friday suggested that perhaps we are trying to find some type of stability. On the other hand, if we can break above that ¥147.33 level after the Federal Reserve meeting, it could send this market toward ¥149.80 level.

However, keep in mind that the market is going to be waiting for the Bank of Japan next week as well, and that will probably be the main driver. After all, the market is likely to continue to see a lot of questions asked as to whether or not the Japanese will normalize rates, but I don’t think that happens anytime soon. After all, the debt that Japan finds itself in is far too high for the government to finance at a reasonable interest rate level.

In other words, they have to find the delicate balance between inflation and inflating debt. This is a dance that the Bank of Japan has been doing for years, so I think that even if they do trying to follow the next several moves will be difficult as the market will have to come up with the idea of whether or not the Japanese are serious. The interest rate differential will still be very wide, so that is something worth paying attention to as well. You still get paid to hold this position and I think that’s part of what’s going on.

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