USD/JPY Forecast – US Dollar Rallies

USD/JPY Forecast Video for 09.11.23

US Dollar vs Japanese Yen Technical Analysis

The US dollar has rallied a bit during the trading session on Wednesday as we continue to see a lot of Japanese Yen weakness. At this point, I think we are going to try to challenge the highs again, and the occasional short-term pullback should be a nice buying opportunity in a market that continues to see interest rate differential drive the market higher. After all, the Bank of Japan is doing nothing to strengthen its currency, and the interest rates coming out of that country are anemic compared to places like the United States as they continue to see rates rise.

In fact, I think Japan’s got a major problem right now due to the fact that they are one of the most indebted nations in the world, but at the same time, they have to somehow finance that massive amount of debt, meaning that they need to keep interest rates lower. That in turn has currency traders shorting the Japanese yen, so they can either get buried in debt, or watch their currency eviscerate. They don’t really have an opportunity to do anything other than those 2 outcomes. In other words, I think the Japanese yen could get much, much weaker over the longer term.

At this point, the Bank of Japan is probably hoping for a gradual drop in the value of the currency, and not a sudden one. They occasionally will jawbone the market back down, but the reality of the situation is everybody knows that they can’t do anything, at least not without causing major economic problems at home.

At this point in time, the markets continue to play games with the idea of what central banks will or will do, but there is some type of fantasy now that the Federal Reserve is going to loose monetary policy they may pause, but that still causes an almost 5% differential between these 2 currencies which will have the trend very much intact going forward, and therefore I just don’t see how you do anything against it. Once we break above the ¥152 level, the markets are free to go looking for the 155 you level after that.

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