USD/JPY Forecast – US Dollar Testing Major Support

USD/JPY Forecast Video for December 26, 2023

US Dollar vs Japanese Yen Technical Analysis

The US dollar did very little during the trading session on Friday, as we continue to dance around the crucial ¥142 level. The ¥142 level of course is an area that’s previously offered support, and now we have a lot of questions to ask about where we go next. All things being equal, this is a situation where traders are trying to sort out what’s going on between the 2 central banks, as the Federal Reserve recently moved the dot plot to show signs of cutting rates next year. This has a negative influence on the US dollar, therefore it’s likely that the pair will continue to see sellers.

On the other hand, pay close attention to Bank of Japan, because recently they had made quite a few headlines suggesting that they could do something about normalizing rates, but the reality is that once they got to the meeting, they blinked. Because of this, this is a situation where the market continues to see a lot of noisy behavior as these 2 currencies will end up being weak, and therefore I think you get a situation where this could be somewhat range bound in the short term.

All of that being said, if we were to break down below the uptrend line, the market is likely to continue to go much lower, perhaps reaching toward the ¥137.50 level. On the other hand, if we turn around and break above the 200-Day EMA, we are very likely to go look into the ¥145 level. Anything above there would reaffirm the longer-term uptrend because we will continue to go much higher.

In general, I think we are going to see a very volatile move sooner or later, but right now it looks like we are just bouncing around in this area, and I think that will especially be true over the next couple of week or so, due to the fact that the holidays will sap a lot of the volume out of the market. With that being said, this is a situation where you need to be cautious, but I do think that range bound traders will probably like this market in the meantime.

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