USD/JPY Forecast – US Dollar Pulled Back Slightly Heading into the Federal Reserve Meeting

USD/JPY Forecast Video for 02.11.23

US Dollar vs Japanese Yen Technical Analysis

The US dollar has pulled back just a bit during the early hours on Wednesday, as perhaps a little bit of value hunting has come back into the picture as we head toward the Federal Reserve announcement. All things being equal, this is a market that should continue to go much higher, but it does make a little bit of sense to take some profit heading into that very volatile event. Underneath, I see the ¥150 level as a major floor in the market, and now that we are well above that level, it suggests that the market is likely to continue to be one that a lot of people jump into by value.

All things being equal, the market still looks at the ¥152 level above as a major resistance barrier, as it previously has offered a bit of the ceiling. The Bank of Japan has flinched recently, initially suggesting that they were going to try to soften the yield curve control, but essentially came short of saying anything definitive. That is what the candlestick on Tuesday was all about, the market punishing the Japanese. Quite frankly, the market recognizes that the debt in Japan is far too big for the central bank to allow interest rates rise too quickly, so with that being the case, they will continue to engage in quantitative easing. Furthermore, the Federal Reserve is going to stay “tighter for longer”, which of course makes the US dollar stronger.

Underneath, we have the 50-Day EMA near the ¥148 level, and that should offer a significant amount of support from a longer-term standpoint. If the market were to break down below the ¥147.80 level, then we could have a deeper correction, but at this point it seems very unlikely for that to happen, unless of course Jerome Powell totally shocks the market, but I just don’t see that happening anytime soon, so I like the idea of buying dips as we go along, because I think we are in a longer-term secular bull market, and that may be the case for several months at the very least.

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