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

Christopher Lewis
Published: Jun 24, 2024, 13:17 GMT+00:00

The US dollar pulled back just a bit during the early hours on Monday, only to turn around and show signs of strength again. At this point, it looks as if we are trying to test the ¥160 level, an area where the Bank of Japan had previously intervened.

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US Dollar vs Japanese Yen Technical Analysis

The U.S. Dollar has initially pulled back just a bit during the trading session on Monday, only to turn around and show signs of strength again. The 160 yen level above of course is a large round psychologically significant figure and it’s also an area where the Bank of Japan had intervened at one point. So really at this point in time, I think we have a scenario where we may be able to break through there. And I do think that we will eventually, but I don’t know if we will do it right away. We may have to have a little bit of a short-term dip. And we have in fact already seen that in the early hours of Monday.

Regardless, I have no interest in shorting this market, and if we do break down from here, 158 yen would be a place that I’d be very interested in. The 50-day EMA I would be interested in as well, and then again at the 155 yen level. On the other hand, if we can break above the 160 yen level on a daily close, then I’m buying and holding this pair yet again.

Remember, you get paid at the end of every day to hold the US dollar against the Japanese yen, and I do think that comes into the picture as a major reason as to why this pair continues to rally. The interest rate differential is wide enough to drive a truck through, and it doesn’t look like the Federal Reserve is in a hurry to cut rates. So that’s probably going to continue to be the case. In other words, I expect to see the Japanese yen continue to get absolutely pummeled over the longer term.

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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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