USD/JPY Forecast – US Dollar Clinging to ¥130

USD/JPY Forecast Video for 26.01.23

US Dollar vs Japanese Yen Technical Analysis

The US dollar has gone back and forth during the trading session on Wednesday as we continue to dance around the ¥130 level. This is an area that I think will attract a lot of attention in general, so therefore not of this is a huge surprise. After all, last week we had the Bank of Japan reiterated its desire to keep the 10 year note down to 50 basis points, which of course means that they will be printing more yen. While we did give up all of the gains for that day for the most part, we are threatening breaking above that inverted hammer. Once we do, I will become very long of this pair.

In the meantime, it looks as if the ¥127 level underneath has to be the floor. If we break down below there, we will see a huge air pocket underneath it could lead to massive selling. Oddly enough, you will have to pay attention to bond yields around the world, because it’s going to come down to whether or not the Bank of Japan is forced to print currency to defend its yield curve control. Suddenly, everybody is a bond trader, especially when it comes to JGBs, or Japanese Government Bonds.

We recently had the so-called “death cross”, when the 50-Day EMA breaks below the 200-Day EMA, but I would be remiss if I did not point out that it is at best a late indication of a trend, and quite often ends up being a huge fake out.

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