USD/JPY Forecast – US Dollar Bounces From Extreme Lows

USD/JPY Forecast Video for 17.01.23

US Dollar vs Japanese Yen Technical Analysis

The US dollar has bounced a bit against the Japanese yen during trading on Monday, using the ¥127.50 level as support. This is an area that has been important in the past, but quite frankly this pair is going to continue to come down to the interest rate differential between the 2 countries, as the Bank of Japan continues to fight interest rates rising in that country. We have seen the 50 basis point limit be tested multiple times, and therefore it has caused quite a bit of volatility.

That being said, you should keep in mind that it was Martin Luther King Jr Day in the United States, so a lot of liquidity will be a bit of an issue. Ultimately, this is a market that still is very much in a downtrend, and we are starting to see the 50-Day EMA threatened to break down below the 200-Day EMA, which of course sets up the “death cries” that a lot of the longer-term traders will pay attention to. While I don’t necessarily subscribe to the indicator itself, I recognize that plenty of people do.

In other words, it offers a little bit of a “self-fulfilling prophecy.” In this environment, I think that you continue to look at this as a “fade the rally” type of market, at least until the US dollar can prove itself resilient again. As things stand right now, I can give you plenty of fundamental reasons why this should not be happening, but the reality is that the market is thinking in one direction right now, and that’s really all that matters. In this environment, it’s hard to fight what we are seeing.

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