USD/JPY Forecast – US Dollar Continues to Grind Higher

USD/JPY Forecast Video for 28.09.23

US Dollar vs Japanese Yen Technical Analysis

The US dollar has rallied a bit during the trading session on Wednesday, as we continue to see a lot of upward pressure. Alternatively, the Japanese yen continues to suffer at the hands of the Bank of Japan, which has no interest whatsoever in trying to raise interest rates. While they did jawbone the market down a bit recently, the reality is they didn’t do anything, at least not at the last meeting. They cannot raise rates too rapidly, because the Japanese economy is one of the most heavily indebted economies in the world. A skyrocketing interest rate in Japan could cause that economy debacle.

Because of this, the Japanese yen will continue to lose strength, especially against the titer central bank such as the Federal Reserve and its currency, the US dollar. After all, if the Fed is going to remain “tighter for longer”, it means that the US dollar is going to continue to be strong regardless, so when you marry this with a very weak Japanese yen, it sets up for a “one-way trade.” That’s not to say that we will get the occasional pullback, but it certainly looks as if we are going to hit the ¥150 level finally. Given enough time, I think that the market not only hits the ¥150 level, but it breaks through there. It has been more or less a grind higher, but that means that it is more sustainable.

Short-term pullbacks should see plenty of support near the ¥147.80 level, which is an area that the market previously had seen a lot of resistance. “Market memory” should come into the picture there, and therefore I think we’ve got a scenario where the market is going to continue to find plenty of reasons to go higher, therefore I think we also have a situation where the market will look at each step as offering value. In this environment, I have no interest whatsoever in trying to short this market, because quite frankly the interest rate differential pays you far too well at the end of every day to abandon it. Over the longer term, I do think that eventually this market will go much higher, and we could even see a fresh, new high.

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