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

USD/JPY Forecast Video for 10.04.23

US Dollar vs Japanese Yen Technical Analysis

The US dollar initially tried to rally a bit against the Japanese yen but did give back this gain rather quickly. That being said, the market is likely to continue to see a lot of noisy behavior. Ultimately, this is a situation where you need to pay close attention to the overall volatility of this market, so be cautious with your position size, as the market seems to be ready to chop back and forth. At this point, the market has been hanging around the ¥131 level for a while, as the market continues to see a lot of questions asked about the yield curve control situation in Japan.

The Bank of Japan continues to do yield curve control movement, keeping an eye on the 10-year JGB. The 50 basis point level is as high as they will let it run, so anytime we get rising interest rates, the Bank of Japan will start to threaten the printing of currency and flood the market with it. That’s exactly what had the Japanese yen on its back all of last year, so it’s obvious that we will continue to see that correlation as long as they demand keeping a lid on rates. On the other hand, we have the US dollar that is moving back and forth based on the expected interest rate situation from the Federal Reserve. After all, the trading public is all over the place as to what they are going to do with the rates going forward.

Alternatively, there is a big debate going on as to whether or not the Federal Reserve is going to start to loosen its monetary policy, or if it will continue staying tight with monetary policy. Ultimately, the markets are all over the place with this, but it seems as if many are starting to call for the Fed to start loosening again, perhaps even by the end of the year. This has put a little bit of an anchor around the neck of the greenback, but at the same time every time we get a Federal Reserve speaker talking about tight monetary policy, and add strength to the greenback.

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