USD/JPY Forecast – US Dollar Continues to See Upward Support

US Dollar vs Japanese Yen Technical Analysis

As you can see, we initially pulled back just a bit during the trading session on Wednesday but have found the 147.33 level to be supportive enough to turn things around and show signs of life. The 50 day EMA above is going to be significant resistance and I think at this point in time, if and when we break above there, the market could go looking to the 149.80 level. In general, this is a market that has sold off quite sharply recently but is in a much longer term uptrend.

Remember that the interest rate differential continues to pay you to hang on to this market, and therefore I think that a lot of traders will continue to look at it through that prism. Ultimately, I am looking at this as a market that should go back to the 149.80 yen level. But furthermore, break above there and go looking to the 152 yen level.

Even if we pull back from here, I look at this through the prism of a market that has plenty of support near the 200 day EMA at the 145 yen level, and then again at an up-trending channel. Keep in mind Thursday is the PPI numbers, and that could cause a little bit of noise when it comes to the US dollar, but in general, I believe this is a scenario where you want to be somewhat cautious, but optimistic.

Remember, again, you get paid to hang on to this at the end of every night, so if you have a big position like an institutional trader, that does make a huge difference, and that’s part of what causes the trend. Ultimately, this is the way you have to look at the market, one that is going higher for a reason, and therefore there’s no reason to try to fight that. That doesn’t necessarily mean that we are going to go straight up in the air, but it certainly gives you a directionality to this market which you should be following.

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