USD/JPY Forecast – US Dollar Bounces Against Japanese Yen

USD/JPY Forecast Video for 20.07.23

US Dollar vs Japanese Yen Technical Analysis

The US dollar has rallied significantly to reach the 50-Day EMA during the trading session on Wednesday, as we have reached the 50-Day EMA. The 50-Day EMA sits right around the ¥140 level, so that has a certain amount of importance attached to it as well. With that being the case, I think we got a situation where we are trying to break out to the upside but it may take a little while to do so. If we do break above the ¥140.50 level, then I think it is only a matter time before the market really starts to take off, perhaps reaching the ¥142.50 level.

Underneath, the market looks at the ¥138 level as an area that is massive support, as we have seen over the last week or so. It’s also the top of an ascending triangle, and therefore we would see a little bit of “market memory” coming into the picture. The 200-Day EMA sits underneath there, and is rising. All things being equal, as long as we can stay above the ¥180 level, I think this market has a shot at bouncing and going higher. Keep in mind that the Bank of Japan has made its intentions to stay dovish quite clear, and that should continue to work against the value of the Japanese yen itself. On the other side of the Pacific Ocean, you have the Federal Reserve which is almost certainly going to raise interest rates again. Beyond that, the Americans are likely to stay elevated for a while, so you get paid to hang on to this pair over the longer term.

I would anticipate a lot of choppiness and volatility overall, but I do think that given enough time we could go higher. The momentum to the downside seems to be a little bit overdone, as people were worried about the Bank of Japan changing its monetary policy, something that it would never actually do. While the Japanese economy does seem to be picking up a bit, we are still miles away from the Bank of Japan doing anything to change market dynamics anytime soon.

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