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USD/JPY Forecast – US Dollar Continues to Consolidate Against Japanese Yen

By:
Christopher Lewis
Published: Feb 22, 2024, 14:01 UTC

The US dollar was rather quiet during the trading session on Thursday in the early hours, which is a bit of a victory in and of itself considering that the FOMC Meeting Minutes came out on Wednesday, and we ended up basically unchanged.

In this article:

US Dollar vs Japanese Yen Technical Analysis

We are sitting right around the 150 yen level and it looks to me like the market is trying to do everything it can to reach the 152 level above. That being said, in the short term it’s likely we will continue to see a little bit of working off of the froth, if you will, as we continue to go sideways. This is common behavior for the market, so that’s not a huge surprise to see that happen in this type of environment.

If we pull back from here, it’s possible that we could see a move down to the 148.50 yen level, an area that has been paid close attention to in the past as previous resistance. Just underneath there, we have the 50-day EMA followed by the 147.33 yen level. Keep in mind that Wednesday featured the FOMC meeting minutes, and the underlying minutes suggested that there was a lot of discussion in the meeting about the concerns of inflation, so the dollar has been rather quiet against the yen, but the most important thing is it did not lose ground. So, with that being said, I do think it’s probably only a matter of time before we break out. After all, the Bank of Japan is nowhere near being able to tighten monetary policy as the debt level of Japan is astronomical.

Ultimately, I do think that we not only reach the 152 yen level, but once we break above there, there will probably be a move to the upside to try to reach the 155 yen level. This is all about interest rate differential, and of course, the swap that you get paid at the end of every trading session, which does become substantial in a long-term uptrend like this. After all, it is more or less a longer term investment than anything else, as it throws off cash at the end of every day.

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

About the Author

Being FXEmpire’s analyst since the early days of the website, Chris has over 20 years of experience across various markets and assets – currencies, indices, and commodities. He is a proprietary trader as well trading institutional accounts.

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