USD/JPY Forecast – US Dollar Gives Up Gains at 200-Day EMA

USD/JPY Forecast Video for 04.04.23

US Dollar vs Japanese Yen Technical Analysis

The US dollar has initially rallied during the trading session on Monday but struggled at the 200-Day EMA. It’s worth noting that the candlestick on Friday ended up being a shooting star, and that does suggest that perhaps there is quite a bit of resistance in this area. Furthermore, you need to keep in mind that a lot of what’s going on in this pair is going to be due to the interest rate markets, and of course the Japanese yield curve control situation. This is due to the fact that the Bank of Japan is trying to keep 10 year yields to 50 basis points or lower, meaning that they are printing yen in order to buy bonds and drive down the yield. This has led to a massive selling of the Japanese yen, which we saw last year.

It’s worth noting that we have just formed a major double bottom near the 50% Fibonacci level, and that will attract a lot of attention. Because of this, it makes a certain amount of sense that there might be buyers underneath. That being said, if we were to break down below the ¥127.50 level, then it could open up a flood of selling. It would obviously be a major breakdown of support, and it could send the market much lower. On the other hand, if the market were to turn higher on a break above the 200-Day EMA, then it’s possible that the market could go looking to the ¥137.50 level. That’s where we had seen a significant amount of noise above that level, but if we were to break above there, then it would open up a longer term “buy-and-hold” situation. At this point, that would take a Herculean effort so I’m not necessarily holding my breath for it.

Ultimately, this is a situation where I think you continue to see a lot of choppy behavior in this general vicinity as we are approaching the jobs number on Friday in the United States, which will have a major influence on where we go next as well, as the only thing people are worried about right now seems to be whether or not the Federal Reserve slows down its monetary tightening policy.

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