USD/JPY Forecast – US Dollar Continues to See Noisy Uptrend Against Japanese Counterpart

Christopher Lewis
Published: Oct 3, 2023, 14:16 GMT+00:00

In the Tuesday trading session, the US dollar continued to climb higher against the Japanese yen. This ongoing upward movement is largely influenced by a big difference in interest rates between the United States and Japan.

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USD/JPY Forecast Video for 04.10.23

US Dollar vs Japanese Yen Technical Analysis

The United States has been steadily increasing its interest rates, especially for short-term bonds. This makes the US dollar more attractive to investors when compared to the Japanese yen. On the other hand, the Bank of Japan has decided to keep its interest rates unchanged. This decision reflects the challenges the Bank of Japan faces in dealing with its debt and inflation issues.

For traders, it’s important to watch out for the ¥147.80 level. This level has proven to be a strong support area over time. If there’s a drop in the value of the US dollar, it might test this level. The 50-Day EMA is also getting closer to this level.

On the other hand, the ¥150 level is expected to act as a significant resistance point. While it might seem like an attractive target for traders, it could push the price back down. Currently, market participants see any drops in the value of the US dollar as opportunities to buy “cheap US dollars.” The difference in interest rates between the US and Japan remains the main driving force, and the overall sentiment suggests that the US dollar could go even higher, possibly targeting the ¥152 level, which was last seen as a high point in late 2022.

The current trend indicates that the US dollar is expected to keep rising, but it’s essential to remember that nothing is guaranteed, and there might be some bumps along the way. Sentiment is all over the place at the moment in markets.

In summary, the US dollar’s recent strength against the Japanese yen is primarily driven by the significant difference in interest rates between the Federal Reserve and the Bank of Japan. Investors are drawn to the US dollar as interest rates in the United States continue to rise, offering the potential for better returns. While support and resistance levels provide guidance, it’s the interest rate gap that’s expected to be the main driver of the market’s direction. Right now, the market is set for further gains, possibly aiming for the ¥152 level, unless there are significant changes in central bank policies or the bond market.

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

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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