USD/JPY Forecast – US Dollar Continues to Threaten Breakout

USD/JPY Forecast Video for 05.09.23

US Dollar vs Japanese Yen Technical Analysis

The US dollar rallied slightly during the trading session on Monday, as it looks like we are trying to break out above the ¥146.50 level. A break above the high that we made last week would allow this market to go much higher, reaching the ¥150 level. Short-term pullbacks continue to be buying opportunities, as it gives you an idea as to finding some type of value. The ¥144.50 level underneath is a support level, as we have been consolidating.

Keep in mind this is all about the interest rate differential, and the fact that the Federal Reserve will continue to be very tight. Perhaps more importantly, the Bank of Japan continues to be very soft with its monetary policy, and therefore the Japanese yen will continue to be a bit of a punching bag. As long as that’s the case, I just don’t see an argument as to why the market will turn around anytime soon. Even if it does, that ends up being a nice buying opportunity as you can find some type of value in the US dollar itself.

Underneath, if we were to break down below the candlestick from the Friday session, that would obviously be very negative, perhaps opening up the possibility of a move down to the 50-Day EMA. Underneath there, then the ¥142.50 level comes into the picture as support as well. In general, this is a situation where the market continues to see a lot of noisy behavior, but ultimately, we are very much in an uptrend, so therefore it is worth paying close attention to the fact that the pullbacks have consistently been value opportunities for quite some time, therefore I think you’ve got no reason whatsoever to short this market, at least not until something fundamentally changes.

The US dollar continues to be a major beneficiary of interest rate differentials, and therefore I think we probably have further to go, and I do believe that eventually we could even go as high as ¥150 in this market. That being said, we will have to pay close attention to the idea of the central bank staying on course, or changing attitudes.

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