USD/JPY Forecast – US Dollar Recovers After Initial Selloff

USD/JPY Forecast Video for 02.10.23

US Dollar vs Japanese Yen Technical Analysis

The US dollar has initially plunged during the trading session on Friday, but turned around against the Japanese yen as we continue to see a lot of noisy behavior. All things being equal, this is a market that continues to move based on interest rate differential, which of course is quite wide between these 2 currencies. Ultimately, I think the uptrend continues, and we go looking toward the ¥150 level. Anything above there then opens up the possibility of a move to the ¥152 level, and at this point I think there are plenty of buyers willing to step in and pick up US dollars every time they get cheap, as shown during the Friday trading session.

Underneath, the ¥147.80 level is an area that a lot of people will be paying close attention to as well as it was a significant resistance barrier. The “market memory” in that area comes into the picture and supports the market. If you break down below there, then it would obviously change quite a bit, but right now it looks like we continue to favor the US dollar against most currencies, as interest rates in the United States continue to rise. The shape of the candlestick is a bit of a hammer, which of course is a bullish candlestick that a lot of people were paying close attention to. Underneath all of that, we have the 50-Day EMA coming into the picture as well, and racing to the ¥147.80 level, doubling the effectiveness of that area, at least in theory.

Expect a lot of volatility and noisy behavior, but that’s probably something that can be said for almost any financial market at the moment, as we have seen so much in the way of questions asked. All things being equal, I think that we do reach the recent highs again, but it’s probably more or less going to be a grind than anything else. After all, there are fears that the Bank of Japan is going to step in and do something, but they have already shown themselves to be wanting when it comes to being hawkish during their latest meeting, so quite frankly I’m not overly concerned about it.

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