USD/JPY Forecast – US Dollar Sets Out the 50-Day EMA

USD/JPY Forecast Video for 14.04.23

US Dollar vs Japanese Yen Technical Analysis

The US dollar has gone back and forth during trading on Thursday, as we continue to hover around the 50-Day EMA, sitting just below the 200-Day EMA indicator. The market also seems to be paying close attention to the ¥133 level, which is a large, round, psychologically significant figure that a lot of people will be paying close attention to, so I do think it makes a lot of sense to be cautious about getting overly aggressive here, but I do think that if we can break above the high of the Wednesday session, it could open up a move toward the ¥135 level above, which is a large, round, psychologically significant figure and an area where we have seen action in the past.

Keep in mind that the Bank of Japan continues its yield curve control policies, and therefore when interest rates rise, the Japanese yen gets punished as there are concerns that the Bank of Japan will step in and start printing currency again. While I do not necessarily believe that the market is going to take off to the upside, it certainly looks as if the US dollar is trying to form some type of “W pattern” yet again, showing signs of life against the lowly yen. That being said, we also have to keep in mind that the interest rate situation around the world continues to be tenuous at best. With that in mind, I think you can count on a lot of volatility, but it’s also worth noting that the US dollar is approaching the 101 level on the US Dollar Index, which is a major support level. Because of this, we could see a return to dollar buying, but if we do not rather soon, then it’s likely that you could see the US dollar selloff quite viciously.

Keep an eye on Japanese 10 year interest rates, because the JGB is currently capped at 50 basis points, and that of course is something that a lot of people will be cognizant of this, and it will have a major influence on the markets as we go forward. Underneath, I do believe that the ¥131 level should be very supportive. A break below that would be extraordinarily negative.

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