USD/JPY Forecast – US Dollar Continues to Pressure The Yen

US Dollar vs Japanese Yen Technical Analysis

The US dollar rallied a bit in the early hours on Tuesday again, to show signs of life again. All things being equal, this is a market that I think does try to get to the 158 yen level, given enough time, which is basically where the Japanese central bank has intervened. We did touch 160 yen at one juncture, but that is essentially what triggered all of the intervention.

I do think that given enough time, it’s likely that the Bank of Japan is just going to have to deal with the idea of a shrinking yen, because quite frankly, the interest rate differential between not only the US dollar and the Japanese yen, but just about anything on the planet and the Japanese yen dictates that you want to buy yen denominated pairs.

Short-term pullbacks should be buying opportunities. And I do think that the 155 yen level is a significant amount of support just waiting to happen. And then underneath there we have the 50 day EMA sitting above the 152 yen level, which previously had been a major resistance barrier. I think that is essentially your floor in the market.

And that has been seen by the massive sell off and then the hammer that formed right at that level. And in fact, since we formed that hammer, we are up about 300 points almost immediately. So, with that being said, I think you will continue to buy short-term dips. I certainly have no interest in shorting this market. And I do believe that eventually we break above the previously tested 160 yen level.

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