USD/JPY Forecast – US Dollar Gives Up Early Gain Waiting for the Fed

USD/JPY Forecast Video for 14.12.23

US Dollar vs Japanese Yen Technical Analysis

The US dollar started out the day positive against the Japanese yen on Wednesday, as we are waiting on the Federal Reserve and its statement. Underneath, we have the 200-Day EMA offering support, which is a large, round, psychologically significant figure. The ¥145 level underneath is a large, round, psychologically significant figure, and an area that’s been a little bit of a magnet for price.

Ultimately, this is a market that I think is trying to find its footing, but a lot of this will come down to whether or not we get the idea of the Federal Reserve and its noise out of the way. However, that will only last so long as we have the Bank of Japan next week coming out with a monetary policy decision as well. Because of this, I think it’s a situation where the market is trying to forward look as to where we are going to go over the next couple of months, but there are so many questions at this point that it’s difficult to figure out where we’re going.

If we were to break down below the lows that we made last week, then we could see quite a bit of negativity. We would tackle the ¥140 level initially as a short-term support level. On the other hand, if we were to turn around and break above the ¥146.50 level, we could go looking to the previous selloff point at the ¥147.33 level, and then the 50-Day EMA after that. With that being the case, I think you get a situation where the buyers are certainly underneath, but if the Federal Reserve goes ultra dovish all of the sudden, that might be reason enough to see a massive selloff.

That being said, then we have to pay attention to what Tokyo has to say, because a lot of people are expecting the Japanese to try to start normalizing interest rates, this is part of what we have seen the Japanese yen behave as a currency that is suddenly finding buyers. Whether or not that actually plays out remains to be seen, but we should know a lot of answers by the end of the year.

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