USD/JPY Forecast – US Dollar Pulls Back to Find Buyers Against Yen

USD/JPY Forecast Video for 29.03.23

US Dollar vs Japanese Yen Technical Analysis

The US dollar has initially pulled back against the Japanese yen during the trading session on Tuesday but turned around to show signs of life again as the buyers returned on the debt. The market continues to be very noisy in general, but it does make a bit of sense if you understand what’s going on in the bond market. The Japanese continue to fight higher yields, with an interest rate cap of 50 basis points on the 10 year JGB.

The ¥130 level underneath offers a significant amount of support, as we have seen a hammer from Friday, and then turned around to test that hammer a couple of times. The ¥132.50 level above is an area where you would expect to see a certain amount of resistance, as it has been important couple of times in the past, most recently on the attempt to turn around. If we can break above that level, then the 50-Day EMA comes into the picture at the ¥133.50 level. The 200-Day EMA sits just above there, so I do think that it is only a matter of time before we would see some type of exhaustion come into the picture.

On the other hand, if we do pull back on any move to the upside, then we would have a certain amount of expectations for buyers to come back in and pick this market up, keeping an eye on the ¥127.50 level, as it is a major large, round, psychologically significant figure, and an area where we have seen a little bit of a double bottom recently. It’s also the 50% Fibonacci level from last year’s major move, so a lot of things come together for it to be a hard floor in the market.

That being said, if the market were to break down below there, then we could see this market really start to fall apart, and perhaps send this pair plunging much lower, as it would open up a bit of a trapdoor to a major air pocket. On the other hand, even if we do go higher, I think that the rally will probably be significantly choppy more than anything else.

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