USD/JPY Forecast – US Dollar Continues to Grind Higher Against Yen

US Dollar vs Japanese Yen Technical Analysis

The US dollar rallied a bit during the trading session on Tuesday, as it looks like we are trying to get to the ¥155 level. This is a market that has been very volatile as of late due to central bank intervention. But quite frankly, central bank intervention is a temporary phenomenon that can’t intervene forever.

And of course, they only have somewhat of a limited effect. With that being said, I think traders are looking at this through the prism of what’s going to happen longer term and the inevitable shrinking of the Japanese yen. Interest rates in America are going to stay higher for longer, and as long as that’s the case, it makes perfect sense to hang on to this pair.

Yes, you will more likely than not have to deal with some volatility, but eventually will break through the ¥155 level and perhaps go looking towards the highs again. Clearly this is not a pair that you should be shorting anytime soon, because not only would it be going against the trend, but you also get to pay for the privilege of trying to short the market against its trend as the swap would work against you.

With this, I like the idea of buying dips. I don’t necessarily want to jump in and get crazily levered to this position right away. What I want to do is just add as I go along, which is what I had done for several months before, and it looks like we’re setting up for another one of those runs.

For a look at all of today’s economic events, check out our economic calendar.