USD/JPY Forecast – US Dollar Continues to Recover

USD/JPY Forecast Video for 15.05.23

US Dollar vs Japanese Yen Technical Analysis

The US dollar bounced a bit during the trading session on Friday as we continued the recovery we had seen on Thursday. On Thursday, the market tested both the 50-Day EMA and 200-Day EMA indicators, both of which have attracted some support. Furthermore, it’s probably worth noting that the market is in an ascending triangle, which of course a lot of traders will be paying close attention to. On the top of this triangle, we see a lot of resistance near the ¥138 level. If we were to break that level, it would be a very bullish sign, and the “measured move” would suggest that the market could go as high as ¥147.

On pullbacks, plenty of buyers should be waiting to get involved because we have seen so much interest every time we have dipped. Furthermore, we have that uptrend line from the triangle that will continue to act as support, so in this environment, it’s difficult to get overly negative of this currency pair. Furthermore, the market is also cognizant that the Bank of Japan continues its yield curve control policy, meaning they are not allowing 10-year JGB markets to offer more than 50 basis points. To do so, they need to purchase those bonds and to purchase those bonds; they have to print more currency. This lets the market with the Japanese yen, causing moves like we had seen most of last year.

On the other side of the equation, you have the Federal Reserve. Although they may be getting close to or even be done raising interest rates, they are far from loosening them. Because of this, the interest rate differential alone will make this an attractive investment for traders in what is known as the “carry trade.” That being said, if we were to break down below the ¥132 level, it would break the pattern of the triangle, perhaps sending the market into a bit of a messier consolidation play. Either way, at this point, there seems to be no real interest in trying to sell this market off, so therefore I continue to look at dips as buying opportunities, waiting for the inevitable breakout to the upside.

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