USD/JPY Forecast – US Dollar Pulls Back Slightly Against Japanese Yen

USD/JPY Forecast Video for 31.03.23

US Dollar vs Japanese Yen Technical Analysis

The US dollar has pulled back slightly against the Japanese yen on Thursday, but it looks as if there are buyers underneath willing to pick it back up. Because of this, is very likely that we will continue to see the uptrend come back into play, as it looks like the area below the ¥132.50 level seems to be of interest. Above there, then we have the 50-Day EMA sitting around the ¥133.50 level. That could be a bit of a short-term barrier, but ultimately this is a market that is going to continue to move with the bond markets, and the interest rates that go along with them.

Keep in mind that the Bank of Japan continues to use yield curve control, keeping the 10 year JGB at 50 basis points or lower. This means that every time interest rates rise, puts pressure on the Japanese yen, and as a result the yen related pairs go higher. That being said, if the market were to break back down, there seems to be a significant amount of support near the ¥130 level that should offer a bit of a short-term floor. We formed a hammer there at the end of last week, and that of course is typically a sign of significant support, especially considering we formed hammers there previously during the beginning of the month of February.

I would expect a lot of noisy behavior, and therefore you need to be cautious with your positioning size, as an overall protective barrier to the massive amounts of volatility that we see in the market at the moment. Because of this, you will have to be very cautious but recognize that the market will continue to be looking to the upside, but if we were to break down below the ¥127.50 level, then it would change everything, perhaps opening up a big move to the downside. With all that being said, you have to be able to stomach a lot of volatility, due to the fact that the bond markets seemingly are out of control at the moment and show no signs of settling down.

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