USD/JPY Forecast – US Dollar Continues to Power Higher Against the Japanese Yen

USD/JPY Forecast Video for 01.03.23

US Dollar vs Japanese Yen Technical Analysis

The US dollar has rallied a bit during the trading session on Tuesday, as we continue to see the Japanese yen pay the price for the Bank of Japan monetary policy. As the 10 year JGB presses 50 basis points, the Bank of Japan has to step in and start printing yen in order to buy bonds. Quite frankly, at this point Japan has no other option but to accept either a weakening currency, or higher interest rates.

With interest rates around the world climbing overall, it does make a lot of sense the Japanese yen will continue to get hammered as more pressure will be put on the bond market in Tokyo. As the Bank of Japan is the only major central bank in the world offering quantitative easing, the Japanese yen is an easy target for currency traders. With that being the case, not only will the US dollar continue to climb against the Japanese in but is very likely that we will see multiple other currencies do the same. In fact, when you look at the British pound, it is completely ripping the face off of the Japanese yen.

Just above, the ¥137.50 level is an area that we will need to pay close attention to due to the fact that it was a previous resistance barrier, right along with support. There should be a certain amount of “market memory” in that area, and therefore it’s going to take a significant amount of momentum to break through that area. Short-term pullbacks are very likely, but those will more likely than not end up being buying opportunities.

The ¥135 level underneath should be support, due to the fact that it is a large, round, psychologically significant figure, and it is also an area that we have seen quite a bit of noise there in both directions. The 200-Day EMA sits near the ¥134 level, and the 50-Day EMA is getting ready to cross above there in order to form the “golden cross” indicator that a lot of people pay close attention to for a longer-term “buy-and-hold” type of attitude. I have no interest in shorting this pair anytime soon, at least not until the interest rate situation around the world calms down.

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