USD/JPY Forecast – US Dollar Is Finding Support Against Yen

USD/JPY Forecast Video for 05.05.23

US Dollar vs Japanese Yen Technical Analysis

The US dollar has fallen initially against the Japanese yen during trading on Thursday, but it’s probably worth noting that the 50-Day EMA and the 200-Day EMA indicators are both sitting just below the candlestick for the day, and therefore one would assume that there should be a significant amount of support. Furthermore, it’s also worth noting that we continue to make “higher lows” in this pair, and I think it’s probably only a matter of time before we turn around and try to reach the top of the triangle.

Speaking of the triangle, if we do break out to the upside, meaning that we clear the ¥138 level, opens up the possibility of a “measured move” all the way to the ¥146.50 region. That being said, it’s not necessarily going to be easy or a straight shot, but there is almost certainly going to be a significant amount of buying pressure over the longer term. In fact, a lot of this comes down to more of a swing trade than anything else, and this is a pair that I am in fact very bullish of.

The Bank of Japan continues to see reasons to keep up its yield curve control scheme, as the 10 year JGB has a cap of 50 basis points, meaning that the Bank of Japan will step into the market and start buying bonds if yields get to be too high. The central bank will have to print more currency in order to make that happen, so that’s part of what we have seen over the last couple of years. Ultimately, as they flood the market with supply, it does make a certain amount of sense that the Japanese yen would lose strength. On the other side of the equation, it’s difficult to see how the US dollar would lose strength anytime soon, as the Federal Reserve continues its tight monetary policy, and has raised interest rates yet again. Whether or not they continue to do so is an open question but is still there is a huge interest-rate differential between the 2 economies.

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