USD/JPY Forecast – US Dollar Continues to Show Strength Against Yen

USD/JPY Forecast Video for 16-01-2024

US Dollar vs Japanese Yen Technical Analysis

The US dollar has rallied against the yen early during the day on Monday, but keep in mind, it’s also Martin Luther King Jr. Day in the United States, so a certain amount of liquidity will be missing from the market. It looks like we are threatening the shooting star from last Thursday, and if we can break above that shooting star, it’s likely that the US dollar will go looking toward the 147.33 level.

The Japanese yen itself is on its back foot and that makes a lot of sense considering that the Bank of Japan continues to have negative real rates and therefore, you lose money holding on to the Japanese yen. At the same time, the market has been trying to suggest that the Federal Reserve is going to cut aggressively in 2024 and that has put a lot of pressure on the US dollar.

Nonetheless, it does look like we have saved the dollar on the bounce, and the overall uptrend. Because of this, I like the idea of buying pullbacks in this pair because, quite frankly, you get paid to hold on to it. Also, we are now back above the 200 day EMA and have successfully held above there for a while now. That is the very definition of an uptrend for most traders, so I think you need to look at it through that prism.

Even if we were to break down below the 200 day EMA I think it’s not until we break down below the 140 yen level that the downtrend would continue from the last couple of weeks. Overall, we are still very bullish from a multi-month perspective so this correction may just be that, it might just be yet another correction in a market that has done this a few times in the past, only to see buyers come flooding back in. I don’t want to sell this pair anytime soon, but I did look at pullbacks as potential buying opportunities. That’s how I will be trading this market going forward.

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