USD/JPY Forecast – US Dollar Testing 50-Day EMA

USD/JPY Forecast Video for 27.07.23

US Dollar vs Japanese Yen Technical Analysis

The US dollar fell a bit during the trading session on Wednesday, as we are waiting on the Federal Reserve interest rate decision. This obviously has a major influence on the US dollar, so it should not be much of a surprise that there might be a bit of profit-taking at this point. However, this sets up an interesting question, which of course is what we are going to do after the Federal Reserve releases its interest rate, and perhaps more importantly, the press conference afterward. After all, the Federal Reserve raising during the meeting is not going to be much of a surprise, but traders will be paying attention to the tone of the statement and press conference, to get a little bit of a heads up as to how tight the Federal Reserve will remain.

Furthermore, you need to keep in mind that early on Friday, the Bank of Japan will have its interest rate decision, and of course will have some type of statement coming out. In other words, the next couple of days could be very noisy for this pair, and it’ll be interesting to see how this holds up. I anticipate that some type of pullback probably offers a buying opportunity, and I look at the ¥138 level underneath as a major floor in the market, as it was previously the top of an ascending triangle. With that being the case, I am paying close attention to this market if we get down to that area, because a breach of that level and of course the 200-Day EMA in that same general vicinity would send this market reeling.

On the other hand, if we can break above the top of the candlestick for the trading session on Wednesday, I anticipate that the market is probably going to target the ¥142.50 level, followed by the ¥145 level. The interest rate differential continues to favor the US dollar, but the question now is going to be how long will the Americans stay tight? I do believe that they are willing to stay tight for longer than a lot of the market is suggesting, especially over in the equity market so I do favor the upside at the moment.

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