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

USD/JPY Forecast Video for 11.04.23

US Dollar vs Japanese Yen Technical Analysis

The US dollar has initially pulled back just a bit during the trading session on Monday, but then turned around to show signs of strength again. The 50-Day EMA sits just above and is offering a significant amount of resistance. At this point, I would anticipate a little bit of a pushback, but quite frankly the moving averages do get sliced through enough that it’s not like it’s going to be a “brick wall.”

Looking at this chart, it appears that the ¥131 level is the beginning of support, extending all the way down to the ¥127.50 level. The ¥127.50 level has offered a short-term double bottom, and therefore I think it probably becomes the floor in the market going forward. With this, I think we’ve got a situation where you are looking for dips as an opportunity to pick “cheap dollars”, as the Japanese Yen of course continues to see a lot of negativity overall, due to the fact that the Bank of Japan practices yield curve control. This is the practice of putting a cap on the amount of interest rates coming out of the country. In other words, every time the interest rates on the 10 year JGB start to rise toward the 50 basis point level, the Japanese have to print more currency to buy those bonds in order to keep those rates down. Because of this, anytime rates around the world start to rise, you’re going to have issues with the Japanese yen as the central bank does everything it can to fight that hike.

If we break above the 200-Day EMA, then it’s likely that we could look into the ¥135 level. The ¥135 level is an area that of course is a large, round, psychologically significant figure, and of course will attract a lot of headlines. If we were to break above there, then obviously it would be a very bullish site overall. Quite frankly, this is a market that continues to go back and forth with the bond markets, so therefore you need to keep an eye on them to get an idea as to what to do in this currency pair.

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