USD/JPY Forecast – US Dollar Kicks Off the Week on The Right Foot

USD/JPY Forecast Video for 03.10.23

US Dollar vs Japanese Yen Technical Analysis

The US dollar has rallied a bit during the trading session on Monday, as we continue to see it again against the Japanese yen. The interest rate differential between the Federal Reserve and the Bank of Japan continues to be a mile wide, and therefore the US dollar continues to attract inflows. As interest rates in America continue to grind higher on the short end of the curve, this makes the US dollar much more attractive than the Japanese yen, especially as the Bank of Japan recently chose to do nothing during its interest rate decision and statement. This shows just how “painted into a corner” when it comes to what he can do about its debt situation, and of course it’s inflation situation.

Underneath, the ¥147.80 level is an area that I think continues to offer massive support, and therefore if we do pull back from here, it’s possible that we could test that area. That area should be a bit of a “low in the market”, as it was a previous resistance. The 50-Day EMA underneath has offered significant support in the past, and it is racing toward that support region.

On the upside, the ¥150 level will almost certainly offer a significant amount of resistance, and therefore I think it makes a decent target, but also could offer a little bit of resistance that could push the market back down. I look at dips at this point in time as a buying opportunity, as it offers “cheap US dollars” underneath. I think that the interest-rate differential will continue to be a major driver of where this market goes, at this point I think it probably continues to go much higher, perhaps reaching toward the ¥152 level, which was the previous high that the market made in late 2022. I have no interest in shorting this market, at least not without the central banks changing their attitude or the bond market suddenly reversing. I just don’t see that happening anytime soon. Because of this, this is a one-way trade, but that doesn’t mean it goes straight up in the air forever.

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