USD/JPY Forecast – US Dollar Recovers After Initial Pullback

USD/JPY Forecast Video for 28.07.23

US Dollar vs Japanese Yen Technical Analysis

The US dollar has initially fallen against the Japanese yen, but then turned around on Thursday to show signs of life. The 50-Day EMA has offered a bit of support, but we are back above the ¥140 level after falling apart early in the session. All things being equal, if we can break above the top of the candlestick for the day, then it’s technically a buying signal, but you should keep in mind that the Bank of Japan has a massively important interest rate decision overnight, so I would anticipate more volatility. Longer term, this is a market that still looks as if it wants to go higher, unless of course the Bank of Japan does something to shock the markets.

If we turn around and break down below the bottom of the candlestick, then it’s possible that we could go looking down to the ¥138 level, which is a large, round, psychologically significant figure, but perhaps more importantly, the top of an ascending triangle that should have a lot of “market memory” attached to it. The 200-Day EMA continues to grind away toward that area, so therefore I think you get a significant amount of attention paid to this area. With this, I think it’s only a matter time before we take off, perhaps reaching to the ¥142.50 level, which is an area that is obviously an area that has mattered, and breaking above there is likely that we go look into the ¥145 level.

Buying on the dip remains the way I think we have to go approaching this market, because the interest rate differential is going to continue to be a major driver of this market to the upside, and therefore I think it’s probably only a matter of time before we break out to the upside and a lot of swap being collected at the end of the day. I do expect quite a bit of volatility, and therefore you need to be cautious with your position sizing, but it’s obvious to me that this market has a lot more upward momentum than anything else, and with the Bank of Japan entering the fray, it could offer a “buy on the dip” opportunity yet again.

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