USD/JPY Forecast – US Dollar Continues to Rally Against the Japanese Currency

USD/JPY Forecast Video for 27.02.23

US Dollar vs Japanese Yen Technical Analysis

During the Friday session, we sold the US dollar down to the 200-Day EMA, and then turned around to bounce again. Now that the market is back above the ¥135 level, it looks as if the US dollar may try to continue to go much higher against the yen. Keep in mind that the Bank of Japan continues to have a desire to keep 10 year yield down to 50 basis points, and therefore it means that they will have to print Japanese yen in order to buy those bonds. As the bond market continues to threaten a breakout, the Japanese will continue to print yen quite aggressively. If that’s going to be the case, then there’s really nothing to stop the US dollar to go higher.

The ¥137.50 level above is a significant resistance barrier, so I do think it’s probably only a matter of time before we see this market try to test that area. The candlestick on Friday certainly looks very positive, so I think we have a lot of momentum flowing into the marketplace. As long as it is going to be the case, then I think you continue to find more of a “buy on the dips” strategy, as we have turned the tide of this market around completely, showing signs of life again in the greenback. Especially as we ended up forming a double bottom near the 50% Fibonacci level, down near the ¥127.50 level.

It is not until we break back down towards that area that I would be interested in shorting this market, but I think ultimately this is a market that is trying to reiterate its uptrend, and now that we are above both the 50-Day EMA and the 200-Day EMA indicators, it suggests that most trend traders will follow right along with this. If we can break that next barrier, this market could really start to take off to the upside. Pay attention to the 10 year yield in Japan, because the higher he goes, the worse the yen will perform.

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