USD/JPY Forecast – US Dollar Sideways Against The Japanese

US Dollar vs Japanese Yen Technical Analysis

The US dollar has done very little during the trading session on Monday against the Japanese Yen as has been the case for a good week or so. That’s mainly due to the fact that there isn’t much to push the market around. Monday was without any significant economic announcements, so that comes into play as well. I think at this point in time the US dollar is essentially trying to consolidate its gains against the yen before making its next big move. It’s possible that we could get a little bit of a pullback at this point, but even then, I think it just ends up being a nice buying opportunity. The 50-day EMA sits right around the 148-yen level, and I think in the meantime, that might be an interesting area to get involved in if we do get a significant pullback.

On the upside, the 152 yen level is an area that we’ll be paying attention to because if we can break above there, it does lead to more FOMO trading to the upside. Keep in mind that the interest rate differential between the two central banks, of course, continues to favor the US dollar in a huge way. And as long as that’s going to be the case, there’s no real need to think about shorting this pair. That’s been the case for the better part of several years now and I just don’t see it changing suddenly.

Yes, you will get the occasional sell-off and yes, you will get the occasional jawboning coming out of Tokyo, but at the end of the day the Bank of Japan cannot raise interest rates. They just simply don’t have the ability to take on that much debt in Japan at higher rates. It’s pretty much already known that they’ll never actually be able to repay all of their debt. With that being said, I do think that we eventually go higher, but we are just waiting for some type of catalyst. Right now, we don’t have it, but the trend is very much to the upside, so there’s no need to fight it.

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