USD/JPY Forecast – US Dollar Plunges but Recovers Against the Yen

USD/JPY Forecast Video for 06.10.23

US Dollar vs Japanese Yen Technical Analysis

The US dollar fell during the trading session on Thursday, only to turn around and show signs of life again against the Japanese yen. The interest rate differential of course is still the big story here, but we also have the jobs number on Friday and therefore I think it’s probably going to be pretty quiet between now and then. With that being the case, I would be cautious about getting overly exposed, but we are most certainly in an uptrend, and is going to take a significant amount of effort to change that.

A couple of days ago, there were rumors that the Bank of Japan intervened in the currency market, but since then we have seen reports that suggest that perhaps it wasn’t the BoJ. Regardless, this is a market that I think is going to continue to look at that 150 level as a potential target, with the 147.80 level underneath offering a significant amount of support. The 50-Day EMA continues to raise toward the 147.80 level, and therefore I think it becomes even more important.

During the Friday session, I would not be surprised at all to see a bit of a pullback, but I would also not be surprised at all to see the market find plenty of buyers on the dip. Quite frankly, there are a lot of questions out there when it comes to global growth, and therefore it would be interesting to see whether or not the Federal Reserve still is seen to be hawkish and tight with monetary policy, or if the markets start to push against the US dollar.

On the other side of the equation, we have the Bank of Japan suggesting that they will have to stay ultra-loose for the foreseeable future. With the Japanese debt levels being as horrific as they are, there’s really no way that the Japanese can get away with higher interest rates anyway. Because of this, you continue to get paid to hang on to this uptrend via swap, and I think that will sort itself out over the longer term going forward.

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