USD/JPY Forecast – US Dollar Tests Resistance Against Yen

USD/JPY Forecast Video for 03.05.23

US Dollar vs Japanese Yen Technical Analysis

The US dollar has initially tried to rally a bit against the Japanese yen on Tuesday but gave back its gains to show signs of hesitation at a previous resistance barrier. The ¥138.50 level seems to be rather important, as it is the top of the ascending triangle, and therefore if we could break above that area, we could really start to see the US dollar takeoff against the yen. Keep in mind that the Wednesday session features the Federal Reserve meeting, and that of course will have an influence on what happens with the greenback. Ultimately, this is a scenario where we could see a rather explosive move.

That being said, we got here rather quickly so a little bit of a pullback does make a certain amount of sense. After all, the last couple of daily candlesticks have been massive, so a little bit of a pullback does make the market much more attractive to buyers, which I do think eventually will attract plenty of. Ultimately, this is a market that continues to see a lot of noisy behavior, and therefore you need to be very cautious about your position sizing. A pullback at this point in time should in theory be a nice buying opportunity, and I would be especially interested near the ¥135 level.

However, if we simply take off to the upside then it opens up the possibility of a move to the ¥140 level. That of course is a large, round, psychologically significant figure, and an area where we’ve seen a little bit of action in the past. The next couple of days could be very noisy in general, especially as the Federal Reserve will have a significant interest rate decision and statement on Wednesday, and then of course we have the European Central Bank doing the same thing on Thursday, which will affect the US dollar as well. All things being equal, it’s worth noting that the market is building pressure to the upside, so I think the pullback should offer plenty of value. I do not have any interest in shorting this pair anytime soon, and therefore it’s simply a matter of seeing a nice buying opportunity.

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