USD/JPY Forecast – US Dollar Takes Off After BoJ

US Dollar vs Japanese Yen Technical Analysis

You can see the U.S. Dollar continues to show signs of strength against the Japanese yen as the Bank of Japan did end negative rates overnight, and quite frankly, it didn’t seem to matter. I think it comes down to what people believe they’re going to do going forward. And at this point in time, it’ll be interesting to see how this plays out, but clearly this hasn’t phased the market, nor should it. I’m looking at the interest rate now and it’s 0.1%, so you’re still getting paid a truckload for holding this pair.

That’s always been the situation here. And quite frankly, I said yesterday that if we got a pullback, it’d be a buying opportunity. Well, we didn’t even get the pullback. So now it just looks more of the same. With that being the case, I think you’ve got a situation where any time you do pull back, you have to look at it as a potential buying opportunity. Quite frankly, I don’t want to get too cute here. I’d rather just be a value hunter. Now, if we can continue to go higher, the 152 yen level is an area that you’re going to have to pay close attention to.

That is an area that I believe you probably will have to look at through the prism of whether or not the interest rate differential remains. We also have the Federal Reserve, so do keep that in mind. That will be something worth paying attention to. Remember, the Federal Reserve on Wednesday will determine what they’re going to do next with the dollar, interest rates, et cetera.

They’re not expected to do anything right then, but it will give you an idea as to how quickly things could accelerate in the cutting or whether or not they’re going to stick around. I think at the end of the day, you’ve got a situation where traders are just going to continue to look at this through the prism of getting paid at the end of each session. And if that’s going to be the case, then it’s always going to favor the green bag. Because of this, I’m looking at the 50-day EMA and the 147.33 level as a potential pullback area that I’d be a buyer of.

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