USD/JPY Forecast – US Dollar Continues to Tread Water Against the Japanese Yen

USD/JPY Forecast Video for 02.02.23

US Dollar vs Japanese Yen Technical Analysis

The US dollar has initially tried to rally during the trading session on Wednesday but gave up gains above the ¥130 level. As we wait for the FOMC, traders are jockeying for position, because quite frankly this could be one of the biggest meetings of the year. The market has been very negative for a while, but at this point in time we will see what the FOMC has to say, and perhaps what Jerome Powell has to say during the press conference. Clearly, the reserve is not thrilled about the fact that everybody is completely “risk on” yet again when they need the economy to cool down.

With this in mind, if the market can take out the inverted hammer from earlier this month, then I believe that the market really starts to take off. That would be at roughly ¥131.50 above, at that point I think the market starts to change its overall attitude. That being said, if we break down below the ¥127 level, there is a huge air pocket underneath that could lead to massive losses. If that happens, one would have to think that it is a general run on the US dollar.

However, at this point in time, it’s a little early to call that, and it’s probably worth noting that we are at a major inflection point on the chart to begin with. With this being the case, it’s a bit difficult to get overly aggressive until we get through the FOMC, and then of course we have the jobs number coming out on Friday. Nonetheless, if we do get a break down or a melt top, you should have plenty of time to join the fray. Patience will be rewarded.

For a look at all of today’s economic events, check out our economic calendar.