USD/JPY Forecast – US Dollar Bounces at 200-Day EMA

USD/JPY Forecast Video for 06.12.22

US Dollar vs Japanese Yen Technical Analysis

The US dollar has bounced a bit during the trading session on Monday, showing signs of life near the 200-Day EMA. The 200-Day EMA is obviously a longer-term chart indicator that people pay close attention to, with the algorithmic traders out there paying close attention to it as well. Ultimately, I think this is a situation where we will continue to see a lot of noise in this area, especially as we are hanging around the ¥135 level.

If we can break above the high from the Friday candle, it’s likely that the ¥137.50 level as a potential target, opening up the possibility of a move to that area over the next several sessions. On the other hand, if we were to turn around and break down below the bottom of the candlestick on Friday, then it’s likely that we could go lower, perhaps reaching down to the ¥132.50 area for support. Underneath there, then you could be looking at the ¥130 level.

You need to keep in mind that the interest rates have a huge, outsized influence on this pair, so watch yields in America. If they start to rise again, that could send this market higher, as the Bank of Japan continues to see needs for yield curve control. Ultimately, this is a market that continues to look as if it’s trying to find a bottom but could be on the verge of collapse. This will all come down to the bond market, because quite frankly it’s all about the Bank of Japan doing its unlimited quantitative easing. If other banks around the world have to follow the same pattern, then it will make the Japanese yen one of the most undervalued currencies out there.

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