USD/JPY Forecast – US Dollar Recovers After Initial Plunge Against the Yen
USD/JPY Forecast Video for 24.03.23
US Dollar vs Japanese Yen Technical Analysis
The US dollar initially fell a bit against the Japanese yen during trading on Thursday, but it looks as if the ¥130 level is starting to show signs of support. The ¥130 level of course is a large, round, psychologically significant figure, and an area where we’ve seen some buying pressure in the past. Furthermore, it’s worth noting that bond markets are all over the place, and as this is a highly sensitive currency pair to the bond markets under normal times, the fact that we have so much central bank intervention and movement over the last several months will only make it worse.
The market recently had pulled back to the 50% Fibonacci retracement level, right around the ¥127.50 level. In fact, we ended up forming a bit of a double bottom there, and of course after that huge move that we had during the previous year, one would have to think that there will be a certain amount of longer-term investors willing to “buy the dip.”
If it moves higher, the ¥132.50 level is an area where we have seen some action in the past, so it does make a potential target for buyers. After that, the 50-Day EMA sits near the ¥134 level, as does the 200-Day EMA. That’s an area that I think could cause a bit of noise, but eventually the market could even go to the ¥136.50 level which was the latest swing high.
Keep in mind that the Bank of Japan continues to use yield curve control, meaning that they have put a limit on the amount of interest that a 10 year note can give in that country, at just 50 basis points. The only way to fight that is to buy unlimited bonds if needed, meaning that they will be printing Japanese yen every time we get close to that area. That’s exactly what happened last year, and therefore we are still in the midst of that huge move. With this being said, the market continues to be very noisy, so you need to be patient with your trading positions.
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