USD/JPY Forecast – US Dollar Falls Against Japanese Yen to Test Major Figure

USD/JPY Forecast Video for 27.03.23

US Dollar vs Japanese Yen Technical Analysis

The US dollar has fallen significantly on Friday to show signs of hesitation in its resumption of any type of uptrend against the Japanese yen. In fact, the market has plunged down to the 130 in level, an area that obviously is a large, round, psychologically significant figure, and an area that would attract quite a bit of attention from traders around the world. With that being said, there is a lot of noise underneath that could also offer support, with the double bottom near the ¥127.50 level being an area that a lot of traders will have to pay close attention to.

With all this being said, keep in mind that a lot of what is moving this market is going to be interest rates around the world, with the Bank of Japan still working with its yield curve control, and therefore it’s worth noting that as rates go higher around the world, that will put quite a bit of pressure on the Bank of Japan to keep the 10 year JGB yield at 50 basis points or lower. On the other hand, if rates start to fall like they have been recently, that puts a lot less pressure on the Bank of Japan, and therefore the Japanese yen will start to strengthen as they are not going to have to step in and print more currency to buy more bonds. Because of this, this market is running almost tickertape with the 10 year JGB rate, and of course the overall attitude upon markets around the world.

Ultimately, I do think that we will find buyers, but there’s also a lot of concerns around the world when it comes to credit, so I think there is going to be a significant amount of volatility and not only this market, but many others. Nonetheless, I still believe that there is a lot of support underneath, at least in the meantime. The 50-Day EMA sits right around the ¥133.50 level and is dropping so that could offer a little bit of resistance. After that, then we could go to the ¥137.50 area. Breaking down below the double bottom near the ¥1.2750 level, then things could get rather ugly.

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