USD/JPY Forecast – US Dollar Plunges Against Japanese Yen

USD/JPY Forecast Video for 02.03.23

US Dollar vs Japanese Yen Technical Analysis

The US dollar initially tried to rally during the trading session on Wednesday, but then gave back those gains rather quickly as we have seen the Japanese Yen get a little bit of abuse during the day against a handful of currencies. For what it’s worth, we had touched the top of a major negative candlestick from December, so perhaps we were due for a pullback anyway.

Underneath, the ¥135 level should be important, as it is a large, round, psychologically significant figure, and an area where we have seen both support and resistance previously. Because of this, it’s very likely that we continue to see a lot of noise in this general vicinity, so I don’t necessarily think that the US dollar is going to start selling off drastically. This is just simply a situation where we are trying to find enough momentum to break out above the ¥137.50 level, an area that had been important previously. Underneath, we have the 50-Day EMA getting ready to cross above the 200-Day EMA, which is a potential “golden cross”, a technical indicator that some longer-term traders like the idea of paying attention to.

That being said, I think that you probably have a little bit of time before you have to jump back into this market, but I do believe that it is a market that will eventually rise. After all, the Bank of Japan continues to do yield curve control, keeping the 10 year yield at 50 basis points or below, meaning that they may have to buy unlimited Japanese Yen to fight the bond market. The market has been very noisy in general, but it does look like we will continue to see a lot of correlation to the bond market.

Ultimately, this is a situation I think that will continue to be very choppy and noisy, but if you are patient and wait for signs of support, you should get a nice buying opportunity in the greenback against the yen, which looks like it’s going to continue to see a lot of weakness over the longer stretch of time like we did last year.

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