USD/JPY Forecast – US Dollar Hanging On to Trendline

USD/JPY Forecast Video for 05.12.23

US Dollar vs Japanese Yen Technical Analysis

The US dollar has gone back and forth during early trading on Monday, as we continue to hang onto a major trendline. All things being equal, this is a market that is a little oversold, and of course the Japanese yen is backed up by a central bank that has absolutely no real ability to tighten monetary policy. Yes, there are people trying to price in the idea that the Bank of Japan may change its policy, but that’s absolute nonsense. The amount of debt in Japan makes it impossible for them to do so in a meaningful way.

All things being equal, this is a market that I think continues to see a lot of volatility, and if we break above the top of the candlestick for the trading session on Monday, the market is ready to go higher, perhaps reaching to the highs from last week. If we break above there, then the market is likely to continue to go looking to the 149.80 again level. Anything above there then opens up the next “layer higher.”

On the other hand, if we break down below the ¥145 level, it would be a very negative turn of events, opening up the possibility of a breakdown to the 200-Day EMA. In general, this is a situation where the market continues to be very noisy, but obviously will be paying close attention to the bond market, because that will tell where we are going in the longer term. In general, this is a scenario where value hunters are coming back into the scenario, so it’ll be interesting to see how this plays out. Ultimately, the market has had a nice pullback, and I think the value hunters are very interested in trying to pick up “cheap US dollars.”

The Japanese yen will more likely than not end up being one of the weaker currencies around the Forex world, due to the fact that the interest rates in Japan will have to stay very low, and of course you get paid to hang on to Japanese yen denominated currency pairs on the whole.

For a look at all of today’s economic events, check out our economic calendar.