USD/JPY Forecast – US Dollar Continues to Rally Against The Japanese Yen

USD/JPY Forecast Video for 17-01-2024

US Dollar vs Japanese Yen Technical Analysis

The US dollar has rallied pretty significantly against the Japanese Yen during trading on Tuesday as traders have come back from the Martin Luther King Jr. holiday. That being said, I think this is a situation where we continue to see a lot of noisy behavior as we have been recovering from the recent sell-off. That being said, we are well above both the 200 day EMA and the 50 day EMA, so I think you’ve got a situation where perhaps traders are trying to sort out what to do next. For what it is worth, the Empire State Manufacturing Index just came out a little lower than anticipated, so you have seen a little bit of a sell-off since then, but I don’t necessarily think that’s going to change the trajectory of the currency market.

While the stock market may react to it in the short term, longer term it doesn’t really mean much. The 50 day EMA and the 145 yen level underneath both should offer support, and I think that will continue to be the case. With this, the market just seems to be freaking out at the latest comments or economic announcement, but we still have an upward trajectory for a reason and the biggest reason of course is the Japanese.

The Japanese are nowhere near trying to tighten monetary policy and therefore, I think you’ve got a situation where over the longer term, the US dollar will continue to reach 147.33 yen and then eventually 149.80 yen. Although we may get a couple of pullbacks in the meantime. This of course sets up the possibility of a “buy on the dips” scenario and given enough time I do think that we eventually find enough value that people jump into the market. Ultimately, this is a situation where I do think that is going to be very difficult along the way but given enough time, we do eventually break higher based on a weakening Japanese Jan, but maybe not even necessarily anything to do with the US dollar itself.

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