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

Christopher Lewis
Published: Feb 2, 2024, 15:39 UTC

The US dollar has rallied significantly during the Friday session against the Japanese yen as the jobs number in the United States came out and roughly double what was anticipated. This suggests that the Federal Reserve will not be able to tighten monetary policy anytime soon.

US Dollar, FX Empire

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USD/JPY Forecast Video for 05-02-2024

US Dollar vs Japanese Yen Technical Analysis

The dollar/yen has shot straight up in the air as Wall Street suddenly finds itself surprised by the fact that the Federal Reserve may not start cutting in March. The jobs number was double what was anticipated. So there has been a bit of a freak out and therefore the US dollar has been piled into. The bond market is expecting massive cuts this year and perhaps the bond market might have things wrong now that we see economic data, especially employment showing that the United States continues to power right along.

If that’s going to be the case, then the cuts may not be coming in. Therefore you’ve seen the US dollar strengthen, especially against the Japanese yen, which of course has a central bank that has no interest whatsoever in trying to tighten monetary policy. The interest rate differential is still wide enough to drive a truck through and therefore, you need to look at this through the prism of a bullish flag, the 50 day EMA offering support underneath and the 200 day EMA underneath their offering support as well.

To the upside, I believe that the Japanese yen could go looking to the 152 yen level, which of course is an area where we have seen a recent high. Then, breaking above that then opens the possibility of a much higher move.

If we break down below the 200 day EMA, then the US dollar could drop down to 141 yen, which was an area we had bounced from rather hard recently. All things being equal, I think you continue to buy dips, but you do take profit when you get the opportunity because I expect to see a lot of chop for the rest of the year. That being said, I don’t think that the choppiness is due to this particular pair, I think that’s what we are going to see in financial markets overall for the next several months as traders continue to play the game of whether or not the Federal Reserve is going to cut rates.

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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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