USD/JPY Forecast – US Dollar Recovers Against Yen

USD/JPY Forecast Video for 25.08.23

US Dollar vs Japanese Yen Technical Analysis

The US dollar has rallied significantly during the trading session on Thursday, as traders are trying to guess whether or not the Federal Reserve is going to continue to show tight monetary policy. With this, I think it’s probably a scenario where it’s only a matter of time before we see a bigger move, due to the fact that the Bank of Japan is doing everything it can to essentially keep rates down to zero. With this, I think you have to look at this through the prism of whether or not the market is going to be nervous about what Jerome Powell has to say, or if they will brush him off yet again.

At this point, it’s obvious that the Bank of Japan is not doing anything to keep the yen afloat, and therefore I think you need to look at this through the prism of the Japanese yen more than the US dollar, although the US dollar will take center stage on Friday itself. All things being equal, the interest rate still is wide enough to drive a truck through, and therefore you get paid to hang on to the US dollar, something that you should pay close attention to.

Underneath, the 50-Day EMA and the ¥142.50 level both offer support. That’s an area where I think you see a lot of buyers coming in to pick up any type of value, but that’s assuming that we can even get down there. At this point, I don’t think it happens easily, and it would take some type of massive meltdown to make that happen. On the upside, I believe that this market will eventually go looking to the ¥147.50 level, an area that previously had been noisy on historical charts. Eventually, I think that the US dollar goes looking toward the ¥150 level, and therefore I don’t have any interest in shorting this market anytime soon. On major pullbacks, I am more than willing to jump in and pick up a bit of value, as the longer-term set up for this pair very much remains the same as it has been for several months.

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