USD/JPY Forecast – US Dollar Breaking Higher Against the Japanese Yen

USD/JPY Forecast Video for 06.09.23

US Dollar vs Japanese Yen Technical Analysis

The US dollar has rallied significantly against the Japanese and during trading on Tuesday, as the liquidity from the summer break has returned. Because of this, it looks like we are prepared for a full break out of this point, and will eventually go looking to reach the ¥150 level. This has been a target of mine for a while, so while this is not a huge surprise, it is a good sign for the analysis.

Keep in mind that Tuesday will have been an important day for the markets as Labor Day on Monday will have The Americans out of the market. Furthermore, this is the first week of fall, at least as far as liquidity is concerned, as August is typically the “vacation month” for larger traders. With that in mind, it’s very likely that we are about to see some very violent moves and the Japanese yen could be in serious trouble in the short term as a result. Because of this, the most important thing you can do is keep your position size reasonable but it’s obvious to me that we are in an uptrend and that is more likely than not going to continue to be the case. If that’s going to be the way this plays out, there’s no point whatsoever in trying to get too cute here and fight against the overall trend.

Yes, we could get the occasional pullback, but that pullback should end up being a nice buying opportunity to pick a “cheap US dollars”, especially as the interest rate differential will get you paid at the end of every day. Bond yields in America will be crucial to determine the overall directionality of this market going forward, but right now it looks like the Bank of Japan is nowhere near doing anything to shore up its currency, meaning that it will allow interest rates to continue to be very low in that country as they fight inflation.

Sooner or later something has to give, and I suspect that thing that gives will be the value of the Japanese yen. I would not be surprised at all to see this market eventually go looking to the ¥160 level. That being said, it’s not can happen overnight so look at the occasional pullback as an opportunity to pick up some value.

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