USD/JPY Forecast – US Dollar Consolidates Against the Japanese Yen

USD/JPY Forecast Video for 04.07.23

US Dollar vs Japanese Yen Technical Analysis

The US dollar has initially tried to rally during the session on Monday, but it looks as if we are struggling just a bit to continue going higher. That does make a certain amount of sense, due to the fact that we are overstretched, and it could pull back toward the ¥142.50 level. This is an area that has a lot of market memory attached to it, so I think at this point it’s likely that we will continue to see that area attract a lot of inflow. Furthermore, we recently had a bullish flag kickoff, and therefore it makes quite a bit of sense since we continue to see upward pressure.

The 50-Day EMA sits at the top of the flag, and is rising quite rapidly. The ascending triangle before there was also a strong sign of bullish pressure, with the ¥138 level being massive support. Both of them have a “measured move” toward the ¥148 level, and I do think that it makes quite a bit of sense that we eventually get there. After all, the interest rate differential between the United States and Japan remains very wide, and that will continue to attract a lot of attention. With that being the case, I think you need to look at this from a prism of trying to find support and value occasionally, as we have gotten a little overdone, therefore we need to see a bit of value offered in order to put money to work. If you are patient enough, then you can find nice entries occasionally.

As far as selling is concerned, it doesn’t look like you can do so anytime soon, and therefore I think you get a situation where it’s very unlikely that the trend changes unless of course the Bank of Japan changes its overall tone, something that I don’t see happening easily. With this, I think the market eventually continues to go higher, but keep in mind that Tuesday is July 4, meaning that it is Independence Day in the United States. This means that there will be a serious lack of liquidity during the day in North America, so I’m not expecting a big move in the short term.

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