USD/JPY Forecast – US Dollar Continues to Build a Base

USD/JPY Forecast Video for 20.12.22

US Dollar vs Japanese Yen Technical Analysis

The US dollar has gapped lower to kick off the trading session on Monday but has turned around to try to take out the gap. Ultimately, this is a market that I think given enough time is going to have to take a serious look at the 200-Day EMA, near the ¥135 level. The ¥135 level course has a lot of psychology attached to it, so if the market were to get down to that area, I would anticipate that the markets will continue to see a lot of support.

If we were to break down below the ¥134 level, then it’s possible that the market could start to really break down. At this point, the market is likely to continue to see a lot of noisy behavior, and therefore could send a lot of sellers into the market, perhaps reaching down to the ¥130 level. On the other hand, if we turn around and take out the ¥138 level, then it’s likely that the market could go higher, perhaps reaching to the ¥140 level given enough time. Either way, I think we are going to see a lot of back-and-forth choppiness, especially as we are at the end of the year, and more likely than not liquidity will become a major issue.

Keep in mind that interest rates rising will help this market, but if the interest rates start to fall, it actually favors the Japanese yen, as the Bank of Japan has been fighting interest rates and therefore printing yen. However, if interest rates ease up, it will drive down the need for that to happen.

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