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USD/JPY Forecast – US Dollar Continues to Kill Time

By:
Christopher Lewis
Published: Dec 27, 2023, 15:44 GMT+00:00

The US dollar continues to kill time against the Japanese yen as we are hanging around the ¥142.50 level.

US Dollar Federal Reserve, FX Empire

USD/JPY Forecast Video for 28-12-2023

US Dollar vs Japanese Yen Technical Analysis

The US dollar did very little during the trading session on Wednesday, as we continue to see the ¥142.50 level offer a significant amount of magnetism for price. The 200-Day EMA continues to offer resistance above and if we were to break above that level, then I think it opens up the door to the ¥145 level. I don’t necessarily see that happening very easily, but it is something worth paying attention to as market participants continue to look at this through the prism of sideways action at the end of the year. After all, liquidity is going to be an issue as we are between Christmas and New Year’s Day.

With all of that being said, we also have a significant amount of support underneath the ¥141 level that is not only an area that’s proven itself in the past, but we also have an uptrend line underneath that level. With that being the case, the market is simply stuck in an area that seems to be a bit comfortable.

The Bank of Japan has an extraordinarily loose monetary policy at the moment, and therefore you need to think about the probability that the Japanese yen remains weak. However, this pair may be a bit different than many others as the US dollar continues to see the effects of the dots being moved on the dot plot that the Federal Reserve put out at the last meeting. After all, traders are expecting lower interest rates to come in 2024, so that certainly put some downward pressure on the US dollar.

In other words, this is a fight between a couple of lightweights, and I just don’t see how anybody feels overly strong about one currency or the other. That being said, we have a couple of areas to watch as mentioned previously, and if we break out of it then it’s likely that we will see this market really start to take off in one direction or the other, followed by some type of momentum building. In the meantime, though, this is sideways action just waiting to happen and therefore short-term scalping is probably going to be the best solution you have.

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

About the Author

Chris is a proprietary trader with more than 20 years of experience across various markets, including currencies, indices and commodities. As a senior analyst at FXEmpire since the website’s early days, he offers readers advanced market perspectives to navigate today’s financial landscape with confidence.

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