USD/JPY Forecast – US Dollar Sits on Top of Previous Important Level

USD/JPY Forecast Video for 19.07.23

US Dollar vs Japanese Yen Technical Analysis

The US dollar continues to consolidate back and forth during the trading session on Tuesday as we have plunged into the vital ¥138 level. This is an area that I do believe continues to be important, as it was previous resistance. You can see on the chart that there was a massive ascending triangle, and that of course is going to continue to be an area that a lot of traders will be paying attention to due to “market memory.” With this being the case, the 50-Day EMA above could be a potential target, assuming that we can bounce from here.

On the other hand, you should keep an eye on the fact that we are between the 50-Day EMA and the 200-Day EMA indicators, and that does suggest that perhaps we will have a choppy area of consolidation. So far, that has certainly been the case so it’s not a real stretch to think that can happen. If we were to turn around and break down below the 200-Day EMA, it opens up the possibility of a move much lower, but I think it would take something rather extraordinarily negative to make that happen.

It is worth noting that so far, the pair has held up after the initial surge lower, so it’ll be interesting to see whether or not the US dollar can make a rally. We need to take out the top of the candlestick from the Monday session to even pretend to be able to do so, so keep an eye on that as well. All things being equal, I believe this is a market that’s probably going to be very noisy, but given enough time I also recognize that the Bank of Japan is most certainly one of the most dovish central banks in the world, and I don’t think that changes anytime soon. With this, we will have to see how things play out but the interest rate differential continues to pay those who hold this position long going forward. With that, the market will continue to be noisy, but I do think that we are in the precipice of making a bigger move.

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