USD/JPY Forecast – US Dollar Pulls Back Against Yen

USD/JPY Forecast Video for 04.05.23

US Dollar vs Japanese Yen Technical Analysis

The US dollar fell hard during the trading session on Wednesday as we waited for the Federal Reserve. The concerns now are what the Federal Reserve will do and of course what Jerome Powell will say. The reality is that we do not know yet, but it’s likely that we will continue to see a lot of hawkish behavior out of the Federal Reserve. More likely than not, we have a situation where the trading public is going to try to “guesstimate” where the Federal Reserve is heading next. Unfortunately, the track record of Jerome Powell as far as being clear with his intentions is hardly stellar.

That being said, the Bank of Japan is very clear in what it wants to do, and that is keep interest rates down. As long as that’s the case, it’s very likely that this pair will eventually continue to go higher. We tested the top of a triangle recently, and pulled back. However, I do think eventually that ¥138 level gets broken, and the market goes much higher. At this point, look at this pullback as a potential buying opportunity, all the way down to at least the ¥133.50 level. It’s a simple matter of being patient enough to wait for some type of bounce or signs of strength to get involved.

I have no interest in shorting this pair anytime soon, unless of course the Federal Reserve were to suddenly say that they are explicitly stopping quantitative tightening, which I don’t think we are anywhere near seen that happen yet. Keep in mind that it’s possible they may “pause” for a while, but the interest rate differential will take over eventually, and the market will correct itself back to the upside if that is in fact going to be the case. Ultimately, expect a lot of volatility and keep your position size reasonable until we get through the next couple of days which also includes the ECB and the jobs number in America.

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