USD/JPY Forecast – US Dollar Continues to Threaten a Major Breakout

USD/JPY Forecast Video for 29.08.23

US Dollar vs Japanese Yen Technical Analysis

The US dollar rallied a bit early during the day on Monday, as we continue to see the imminent breakout as being more likely than not. Keep in mind that the Bank of Japan continues to do everything it can to keep monetary policy limits, thereby keeping interest rates down. That has been toxic for the Japanese yen, and therefore I think you have to look at this as a market that can only go higher over the longer term. As long as the Federal Reserve remains very tight with its monetary policy, it’s difficult to imagine a scenario where we get a longer-term pullback that favors the Japanese yen. Because of this, any time we see a pullback, you should think of it as a potential buying opportunity.

Underneath, we have the 50-Day EMA crossing above the ¥142.50 level, which is an area that we have seen a lot of noisy behavior in the past, and therefore I think it all ties together quite nicely. All things being equal, the market is a situation where you’re just trying to find value that you can take advantage of. The US dollar will eventually go looking to the ¥150 level, perhaps even higher than that. I believe that the Japanese yen will continue to be beaten up by other currencies that offer more of a return in interest, which makes sense considering that there are so many unknowns in the markets right now that people are looking for some type of dividend and/or payment.

If we were to break down below the ¥142.50 level, then it’s possible that we could see this market drop down to the ¥140 level. That being said, it seems very unlikely that we have that happen, therefore I think it’s probably only a matter of time before we see some type of recovery on any pullback. With this, I think you have to look at this through the prism of it being an uptrend, and therefore there’s no point in trying to fight the overall momentum. In general, I still believe that the market goes to the ¥150 level over the longer term.

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