USD/JPY Forecast – US Dollar Continues to See Buyers on Dips

US Dollar vs Japanese Yen Technical Analysis

The US dollar initially dipped pretty significantly during the early end orders on Thursday but has completely turned around and now is threatening the 155 yen area by bouncing the way we have. It shows that perhaps the reaction during the session on Wednesday was overdone and now it looks like we’ve got a real fight on our hands.

The interest rate differential continues to favor the US dollar over the Japanese yen. So, like I said yesterday, even if we do continue to fall, I’ll just look for an area to buy at lower levels. Breaking above, the 155 yen level opens up the possibility of 156.50 yen and then eventually the 159 yen level.

At this point in time, the interest rate differential isn’t shrinking at all, at least not anything worth noting, and therefore you can still basically drive a bus between the two countries as far as interest rates are concerned. I like the idea of buying dips, I like the idea of adding when the trade works out in my favor. I have no interest in shorting this pair because quite frankly, you have to pay at the end of the day for the honor of doing so.

The 152 yen level underneath is a massive support level that I think a lot of people will continue to pay close attention to. And of course, with the Federal Reserve remaining tighter for longer, despite flat retail sales on Wednesday, I think you’ve got a situation where the adults have entered the room and they said, no, the Fed’s not going to start cutting tomorrow. Let’s kind of get back to business here and that’s exactly what we’ve seen so far.

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