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

Christopher Lewis
Updated: Jun 2, 2024, 10:02 GMT+00:00

The USD continues to rally against the lowly Japanese yen on Tuesday, as the market will eventually have to settle on what the Bank of Japan can, or more to the point, cannot do.

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US Dollar vs Japanese Yen Technical Analysis

The US dollar has rallied a bit during the early hours, only to give back those gains against the Japanese yen. Now, as we continue to pressure resistance, the ¥157 level is an area where we’ve seen a lot of selling pressure previously, so it’s not a huge surprise to see the market struggle here.

That being said, I think short term pullbacks continue to be buying opportunities, especially as the interest rate differential continues to favor the greenback over the Japanese yen. With this, it is probably only a matter of time before we break higher to get a look into the 158 and level, and then eventually the ¥160 level. True, the Bank of Japan did intervene, but they are nowhere near fixing what ails the yen.

And the first thing is interest rate differential. But quite frankly, there’s a whole litany of reasons to be worried about the Japanese economy from a longer term standpoint. The 50 day EMA sits near the ¥153.50 level, which is the bottom of the hammer that we had seen form. three sessions before. And therefore, I think you’ve got to look at this as a buy on the dip scenario.

Remember, you get paid at the end of every day to hold this pair. Institutional traders certainly are very well aware of that. So, I think at this point in time we will go higher over the longer term. The market will be noisy, but at the end of the day, I think that the buyers will still have plenty of reasons to get involved going forward.

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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