USD/JPY Forecast – US Dollar Continues to Find Buyers Against Yen

US Dollar vs Japanese Yen Technical Analysis

The US dollar initially pulled back just a bit during the trading session early on Tuesday, only to turn around and show signs of life. At this point, I think you’ve got to look at this through the prism of whether or not we can continue to go higher.

If we break above the 149.33 level on a daily close, then I think you’ve got a shot at reaching the 50 day EMA, but if we can break above there, then we go looking to the 149.80 level. In general, this is a market that I think you continue to buy dips due to the fact that the interest rate differential most certainly favors the US dollar.

However, a little later in the day we have the CPI numbers and then of course will make a major, major difference. With that being said, I think every time the market pulls back, we’ll pay attention to those inflation numbers. But they should continue to show signs that the Federal Reserve may have to pause on its plans to cut rates.

And even if it does cut rates until Japan can bring, there’s a positive, you still have a huge differential between these two currencies and therefore, a lot of traders will continue to go long over the longer term. This pullback has been fairly decent, but we are between the 50 and the 200 day EMA indicators, which is quite often an area where you see a lot of people that come into this area.

If we were to break down below the 200 day EMA, then the ¥145 level becomes a major flaw in the market. Anything underneath there causes a major issue. And I think at that point you have to start to question things. Right now, though, this has just been a decent pullback that I think will probably attract a lot of value hunters and perhaps could be the beginning of a recovery.

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