USD/JPY Forecast – US Dollar Rallies Against the Yen

USD/JPY Forecast Video for 30.03.23

US Dollar vs Japanese Yen Technical Analysis

The US dollar has rallied rather significantly against the Japanese yen during trading on Wednesday to reach the crucial ¥132.50 barrier. This is an area that should continue to be somewhat important, as we’ve seen support and resistance here multiple times over the last couple of weeks. The size of the candlestick is rather impressive, so that’s probably something to keep in the back of your mind. The 50-Day EMA sits closer to the ¥133 level and is dropping rather significantly. By doing so, it suggests that we may continue to see a little bit of resistance, but I do think that eventually we could get through there if the bond markets give us reason to.

Keep in mind that the Bank of Japan is continuing to do everything it can to keep interest rates down, as it is defending the 50 basis points barrier on the 10 year JGB. Because of this, if interest rates are to rise around the world, it does put a certain amount of pressure on the Bank of Japan to print yen, in order to buy those bonds. That’s been the game we have been playing for a good year now, and that is by far the biggest thing that moves this market currently. Because of this, it’s very likely that we will continue to see this dynamic play out, but there is also some technical analysis to back this up as well.

Recently, we had tested the ¥127.50 level, the 50% Fibonacci level from the big move of last year. Ultimately, this is a situation where we have formed a double bottom, and then took off to the upside. We have pulled back since then, but it looks like we are turning right back around so this should suggest that perhaps we are in the process of building a bottoming pattern. I recognize that we have a way to go to confirm that, but clearly, we have seen a bit of a stretch to the upside from the US dollar as of late against the Japanese yen, and it’s probably worth noting that the dollar looks a little oversold against other major currencies as well.

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