USD/JPY Forecast – US Dollar Continues to Look for Catalysts

USD/JPY Forecast Video for 08.02.23

US Dollar vs Japanese Yen Technical Analysis

The US dollar has fallen a bit against the Japanese yen during early Tuesday trading as it looks like we are trying to find some type of catalyst in one direction or another. Ultimately, I think this is a situation where you have a lot of noise out there, so it will be difficult to discern which direction we want to go. However, the last couple of days certainly look very positive and it could be the beginning of something a bit bigger. Jerome Powell speaking during the day could also give us a bit of a boost, as he will almost certainly be hawkish when he speaks.

The 50-Day EMA above continues to be an area that people are going to be paying close attention to, and if we can break above there then it makes sense that we then go looking to the 200-Day EMA, which is sitting just above that area. In this scenario, we would be looking at the beginning of a resumption of the longer term uptrend, which does make sense considering the interest rates are starting to rise around the world again, and of course the Bank of Japan is stuck trying to fight that by printing yen.

As long as they have that issue, it’s difficult to get overly aggressive in buying in, and it must be said that the 10 year JGB got awfully close to their 50 basis point limit yesterday. Every time we get close to that area, the Bank of Japan will have to step in and start printing currency. As before, the most important chart in the world seems to be the 10 year Japanese bond.

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