USD/JPY Forecast – US Dollar Recovers After Initial Selloff

USD/JPY Forecast Video for 25.10.23

US Dollar vs Japanese Yen Technical Analysis

The US dollar initially fell against the Japanese yen, showing signs of negativity, but then turned around to show signs of life again as we continue to see this market pay close attention to the ¥150 level. The ¥150 level is not only a large, round, psychologically significant figure, but it’s also an area where we’ve seen a massive amount of resistance.

There is an open debate as to whether or not the Bank of Japan intervened in this area, so I think a lot of traders are concerned. However, we have definitive proof that the Japanese have intervened in the bond market to keep interest rates down, so it shows that the Bank of Japan continues to see the need to work with quantitative easing. This is toxic for the currency, and therefore I think the Japanese yen will continue to be a currency that traders sell.

The US dollar is buoyed by the idea of higher for longer coming out of the Federal Reserve, meaning that they will keep the interest rates higher than most other central banks around the world. This makes a certain amount of sense, as inflation is very sticky in the United States, and of course the job market continues to hire plenty of people, driving more people into the marketplace to purchase goods, thereby driving inflation higher yet again. With this being the case, it is probably only a matter of time before we see the US dollar overtake the Japanese and, therefore the Bank of Japan. Once we get a daily close above the ¥150 level, then it opens up the possibility of a move to the ¥152 level.

Underneath, the ¥147.80 level will offer a significant amount of support, right along with the 50-Day EMA, making a nice “floor in the market” for the overall uptrend. Whether or not it holds remains to be seen, but as we are in a major uptrend, one would expect that the odds are that it will. Short-term pullbacks continue to offer buying opportunities as we have seen during the Wednesday session, and many of the trading sessions before. With that, I like the idea of finding value when it occurs, but I will not hesitate to buy the US dollar on a daily close above the ¥150 level as well.

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