USD/JPY Forecast – US Dollar Continues to Bounce Higher

US Dollar vs Japanese Yen Technical Analysis

The US dollar initially pulled back just a bit during the trading session on Friday, only to turn around and show signs of life. The 50-day EMA seems to be offering a bit of support, and that is probably worth paying close attention to. The fact that we did turn around the way we have, and it looks like we’re going to try to continue the overall uptrend is something you should keep in the back of your mind.

Keep in mind that the Bank of Japan is nowhere near tightening its monetary policy, and even if it did, we would be talking about going back to zero. At the same time, you have the Federal Reserve, although possibly cutting rates later this year, still much tighter. And at this point in time, I think we’ve got a situation where the interest rate differential will continue to dictate that this pair goes higher over the longer term.

With that being the case, I think you buy each dip and really at this point in time, even if we did turn around and break down the 147.33 level should offer support right along with the 200 day EMA, backed up very quickly by the 145 level. To the upside, the 149.80 level, and eventually the 152 level, both could come into the picture as targets, and therefore I think you have to look at those as potential areas of interest. These areas are being closely monitored by larger traders if the price action is to be believed.

Ultimately, you continue to buy the dips and at this point in time, you continue to get paid at the end of every session and the larger institutional players do take advantage of that over time. And therefore, we get an uptrend. The trend, although did suffer a pullback recently, is still very positive and I think you have to look at it through that prism.

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