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

USD/JPY Forecast Video for 06.03.23

US Dollar vs Japanese Yen Technical Analysis

The US dollar has pulled back a bit during the trading session on Friday as it looks like we are heading towards the ¥136 level in the short term. It’s worth noting that the Wednesday candlestick was a hammer that bounced off of the psychologically significant ¥135 level, so it does set up a nice potential signal. However, the ¥137.50 level is a major resistance barrier. That is a barrier that if we could take out, the market probably go looking to the ¥140 level.

The 50-Day EMA sitting just below looks ready to break above the 200-Day EMA, showing signs of forming the “golden cross.” The market of course does pay close attention to this signal from a longer-term standpoint, so we could eventually break above the ¥137.50 level, and then go looking to the ¥140 level. On the other hand, if we turn around and break down below the moving averages, that would be a very negative turn of events but right now I think that’s less likely to happen. The market recently formed a double bottom near the 50% Fibonacci  level, and therefore a lot of longer-term traders will have looked at that as a perfect place to jump back into the market.

The Bank of Japan has to continue to print yen in order to keep interest rates down in that country, as they have stated that the 10 year yield on Japanese Government Bonds needs to be a 50 basis points or less. I do think that it all end up being quite a bit of noise before we continue to go higher, especially if interest rates continue to rise around the world. However, it’s worth noting that the US yields look like they have topped in the short term, so the pair will probably move right along with that.

Ultimately, I’m bullish of this pair but I also recognize the need to find value. We at the very least probably need to go back and forth in order to digest some of the gain, but I also look at pullbacks as value that’s worth looking toward.

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