USD/JPY Forecast – US Dollar Gives Up Early Gains

US Dollar vs Japanese Yen Technical Analysis

The US Dollar initially rallied against the Japanese Yen as we continue to see the uptrend play out, but it is probably worth noting that we are hesitating a little bit heading towards the FOMC meeting on Wednesday and of course the Bank of Japan meeting on Friday. So I do think there’s a lot of volatility that is just waiting to happen in this market. Short-term pullbacks for me at least are going to end up being buying opportunities. I have no interest in trying to fight the overall uptrend that we have seen for some time. With that being the case, I like buying these dips.

I think the 155 yen level will be a short-term floor in the market, right along with the 50-day EMA there. But if we were to break down below there, then we may just reset it 152 yen. I quite frankly don’t see this trend changing anytime soon due to the fact that even if the Federal Reserve does soften its stance a bit, it’s still light years away from what the Bank of Japan finds itself in, which is a quagmire of debt that you cannot service at higher interest rates.

In other words, the interest rate differential should continue to favor the US dollar for the foreseeable future, and therefore, I do think that we eventually go higher over the longer term, eventually breaking above the recent highs, and blowing through the Bank of Japan intervention, making it disappear in the rearview mirror.

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