USD/JPY Forecast – US Dollar Pulls Back to Support

USD/JPY Forecast Video for 22.05.23

US Dollar vs Japanese Yen Technical Analysis

The US dollar initially pulled back just a bit during the session on Friday to test the ¥138 level for potential support. The market memory came into the picture as it was the top of an ascending triangle, and the buyers started to push the market higher again. Because of this, I believe this market will continue to see buyers jumping in to press to the upside, pushing it toward the ¥140 level. Ultimately, this is a situation where the US dollar will continue beating up the Japanese yen as the interest rate differential between the 2 currencies stays pretty wide.

Looking at this chart, it is very possible that now that we have broken out of the triangle, we could go looking to the ¥148 level. That being said, it makes perfect sense as the Bank of Japan continues to engage in quantitative easing, which is toxic for currency. With that, it makes a lot of sense that the Japanese yen will not only lose ground to the US dollar but multiple other currencies as well.

Any pullback at this point in time would probably constitute value, and judging by the reaction that we had to a pullback on Friday, it does suggest that we are going to go much higher as there is so much interest in this market. That being said, if the market were to break down from here, there is also probably going to be a significant correction that a lot of people will be attracted to. The ¥135 level would be a good area to come in and start buying, as it is not only a large, round, psychologically significant figure, but it is also an area where we had seen action in the past.

Regardless, I do not have any interest in shorting this pair anytime soon, and as a result I would be very patient with my opportunities, and also recognize that the 50-Day EMA is rising and will more likely than not come and offer technical support on a pullback anyway. As long as the Federal Reserve remains tight with its monetary policy, it makes a lot of sense that the Japanese yen will continue to suffer at the hands of the greenback.

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