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USD/JPY Forecast – US Dollar Continues to Find Buyers on Dips

By:
Christopher Lewis
Published: Mar 5, 2024, 13:29 UTC

The US dollar has found a bit of consolidation over the last week or so, and I think we continue to see buyers on dips in this holding pattern.

In this article:

US Dollar vs Japanese Yen Technical Analysis

The dollar has pulled back ever so slightly during the early hours on Tuesday as we continue to consolidate against the Japanese yen. I suspect this makes a lot of sense due to the fact that we had shot straight up in the air previously and of course, this is non-farm payroll week, and non-farm payroll is an announcement that has a major influence on this pair. If we pull back from here, it’s likely the 149.80 yen level comes in to offer support. And if we break down below there, then the 50-day EMA comes into the picture to offer support as well. After that, you have the 147.33 yen level.

In general, this is a situation where you’re looking to pick up bits and pieces of value if and when you get the opportunity. The 152 yen level above is a major barrier. If we can break above the 152 yen level, then the market continues to go much higher. And I believe at that point, you probably have a bit of FOMO trading and perhaps more of a buy and hold situation.

In general, this is a market that I have no interest in shorting, and I do think that the Bank of Japan doing everything it can to keep rates low will continue to be a major driver of the Japanese yen losing value. On the other side of the equation, you have the Federal Reserve and the United States dollar, and the Federal Reserve is likely to continue to see a need to keep interest rates higher than Japan certainly, but just higher in general.

And therefore, you continue to get paid to hang on to this pair. I think the Japanese yen in general is probably what’s driving this pair more than anything else. And that’s what you need to pay attention to here, not necessarily the US dollar as much. As long as the Japanese central bank continues to keep interest rates as low as they are, there’s no real shot at the Japanese yen appreciating in value against most currencies, let alone the US dollar that is supported by higher than usual rates.

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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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