USD/JPY Forecast – US Dollar Finds Buyers on Dips

USD/JPY Forecast Video for 04.12.23

US Dollar vs Japanese Yen Technical Analysis

The US dollar has initially fallen against the Japanese yen during the trading session on Friday, only to turn around and show signs of life again. At this point, I think it’s probably a situation where traders are going to look at this through the prism of finding value and pay close attention to the uptrend line underneath. The uptrend line of course has held quite nicely, and now it looks as if the US dollar is trying to claw its way back against the yen. It’s probably going to be very noisy in this general vicinity, but I think that if we can break above the top of the candlestick for the trading session on Thursday, it opens up a move to the 50-Day EMA.

Breaking above the 50-Day EMA then opens up the possibility of running to the ¥149.80 level, but as ISM numbers came out lower than anticipated, we have seen the US dollar turnaround since I started writing this article. At this point, I think we need to continue to see whether or not this area offers support, therefore it is going to be very noisy. Ultimately, most of this will come down to interest rates and whether or not they continue to drop. Pay close attention to the 10 year yield in the United States, because I will be the biggest driver of where we go next.

The Bank of Japan is nowhere near tightening monetary policy, and quite frankly couldn’t do so even if they desperately wanted to. Because of this, I think that even if the Japanese yen does continue to strengthen, I think you get a situation where it will strengthen less against other currencies. Ultimately, I think this is a situation where the markets are trying to sort out where to go next, and if and when we do, if we can break above the ¥149.80 level, that opens up a resumption of the longer-term trend. However, if we break down below the ¥146 level, then we probably drop another 100 points underneath. It does look very noisy, and at this point I think it’s likely that we see a lot of choppiness that you will have to be very cautious with.

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