USD/JPY Forecast – US Dollar Gives Up Early Gains Against the Yen

Christopher Lewis
Published: Sep 26, 2023, 13:54 GMT+00:00

The US dollar initially tried to rally during the trading session on Tuesday, but then failed to continue the upside. At this point, the market looks as if it is a bit exhausted.

US Dollar, FX Empire

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USD/JPY Forecast Video for 27.09.23

US Dollar vs Japanese Yen Technical Analysis

The US dollar initially tried to shoot higher during the trading session on Tuesday but has given back the gains to show signs of hesitation. The ¥147.80 level underneath is an area that previously had been very resistive, so it will be interesting to see if it holds as support. All things being equal, this is a market that I think continues to see a lot of buying on the dips, especially as the interest rate differential between the 2 currencies remains extraordinarily wide. However, markets don’t move in one direction forever, so it does make a certain amount of sense that we find this market milling about at this point. I anticipate that we could enter some type of consolidation phase, as we try to form enough momentum to continue the uptrend and to break toward the ¥150 level, which is my longer-term target.

That being said, the market probably is a bit exhausted at this point as it has been a one-way trade for so long. Breaking above the top of the candlestick for the Tuesday session kicks off the next leg higher, but we will have to wait and see whether or not that actually holds to be true. In general, I think this is a scenario where we will have to see a lot of patience by bullish traders in order to pay off, but it’s clear that we only have one direction.

The Bank of Japan will continue to do everything it can to fight interest rates, so that will continue to work against the value of the Japanese yen. This of course is a longer-term situation, but in the short term I think we may have a little bit of noisy and choppy behavior. Regardless, I have no interest whatsoever in trying to short this market, so I’m just waiting for a little bit of value to add to an already existing long position that I have been in for quite some time. With this, expect volatility, but this is still a “one-way trade” just waiting to happen for traders who are patient enough.

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About the Author

Being FXEmpire’s analyst since the early days of the website, Chris has over 20 years of experience across various markets and assets – currencies, indices, and commodities. He is a proprietary trader as well trading institutional accounts.