USD/JPY Forecast – US Dollar Continues to See Back and Forth Noise

USD/JPY Forecast Video for 05.10.23

US Dollar vs Japanese Yen Technical Analysis

The US dollar has been very choppy during the Wednesday session as we have stayed in a very tight range. This does make a certain amount of sense considering that the Bank of Japan intervened on Tuesday, but you can see that the price change has been minimal to say the least. Because of this, I think that the Bank of Japan is trying to defend the ¥150 level, but given enough time, this is a market that will break through there. The only real way they can defend the Japanese yen is if they choose to raise interest rates, something that they can’t do. A short-term pullback would be expected, especially as we are heading toward the jobs number on Friday.

The ¥147.80 level is an area that has been important more than once, as we have seen the area offer resistance multiple times over the last couple of weeks. It also offered a significant amount of support after the Bank of Japan intervened, so it’ll be interesting to see if we can drift down to that level. If we can reach down to that level, then I think you got a real shot at finding buyers.

The 50-Day EMA is also in the same general vicinity, as it is racing toward that level, albeit still 100 pips underneath. I think that does offer a certain amount of technical support, and you will have to look at it through that prism. I have no interest in selling this pair, because quite frankly the interest rate differential remains very wide between the 2, and therefore it’s difficult to imagine a scenario where it would make sense to get short at this point.

If we can break above the ¥150 level, then it could be a potential move to the ¥152 level, which is the recent high that we had seen, and of course should have a little bit of market memory attached to it. Ultimately, this is a market that I do think it goes higher over the longer term.

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