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USD/JPY Forecast – US Dollar Continues to Rally

By:
Christopher Lewis
Published: May 1, 2023, 13:09 UTC

The US dollar continues to rally against the Japanese yen on Monday, as we see plenty of bullish pressure.

US Dollar, FX Empire

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USD/JPY Forecast Video for 02.05.23

US Dollar vs Japanese Yen Technical Analysis

The US dollar has rallied a bit against the Japanese yen during the trading session on Monday, as we continue to see the Japanese yen get hammered. After all, the Japanese yen has seen the Bank of Japan work against yields rising, which of course can only be done by purchasing those bonds. In order to purchase those bonds, the central bank has to print more currency. By printing more currency, then obviously the value of the Japanese yen loses strength in the supply/demand equation.

If the market can break above the ¥138 level, then it’s possible that the US dollar could go much higher. I would pay special attention to the Friday candlestick, as it is so bullish. Those types of candlesticks very rarely happen in a vacuum, so I do think that there are plenty of people looking to get involved in that trait as well. I don’t necessarily think it is going to be easy to break to the upside and continue going higher, but I do think eventually it happens. After all, we have seen “a higher low” form since the bottom. Alternatively, it’s worth noting that eventually we should continue to go higher as long as the Bank of Japan continues to stick to its guns when it comes to the yield curve control policy.

The Federal Reserve has an interest rate decision this week that will obviously greatly influence where the US dollar goes as well, so we are setting up for quite a bit of volatility. Finally, there’s a jobs number on Friday in America that also tends to move this pair quite drastically as well. Either way, from a structural standpoint it looks like we are trying to pick up momentum, and therefore I think it’s probably only a matter of time before the ascending triangle kicks off. If that ascending triangle does kickoff, the so-called “measured move” could have this pair going as high as ¥147 or so. I’m not necessarily calling for that, but I do recognize that a move in that general direction does make quite a bit of sense, as we have had such a nice pullback from a huge higher in this pair of the last couple of years.

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

About the Author

Being FXEmpire’s analyst since the early days of the website, Chris has over 20 years of experience across various markets and assets – currencies, indices, and commodities. He is a proprietary trader as well trading institutional accounts.

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