USD/JPY Forecast – US Dollar Continues to Find Buyers

US Dollar vs Japanese Yen Technical Analysis

Taking a look at the dollar against the Japanese yen you can see that the US dollar has rallied quite a bit early during the trading session on Friday and it now looks like we are going to continue to test this 151 yen level. I do think eventually we break above it and go looking to reach the 152 yen level which will ultimately end up being a major high that we had put into the market previously, and therefore I think a certain amount of market memory comes into the picture. With that being the case, I anticipate that we may get a little bit of a fight in that area, but once we break above it, there will be more FOMO in the market, and there will be more chasing, as it were. After all, this is much like other markets right now where it’s all about momentum.

Recently, we’ve been working off some of the froth in that momentum, so it does make sense that we went sideways for a couple of weeks. How long that goes on, I don’t know, but I do think that eventually the market gives way and we go higher. Interest rate differential continues to favor the US, and therefore the US dollar will continue to be a performer against the Bank of Japan, which has negative rates.

With all of that being said, I like the idea of buying dips and I believe that the 149.8 level is an area of support followed by the 50-day EMA. Longer term, if we can break above the 152 Yen level, I would not be surprised at all to see the US dollar go looking to the 155 Yen level, which of course has a certain amount of psychology as a large round figure in and of itself. Either way, you get paid to hang on to this currency pair at the end of the day via the swap, so it makes sense to own it.

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