USD/JPY Forecast – US Dollar Trying to Recover Against Yen

USD/JPY Forecast Video for 31.10.23

US Dollar vs Japanese Yen Technical Analysis

The US dollar has initially fell during the trading session on Monday, before turning around and showing signs of life. By doing so, the market looks as if it is going to continue to target the ¥150 level, and a move above there would obviously catch a lot of attention. That being said, we have the Bank of Japan doing an interest rate decision this week, and that of course will have a lot of influence on where we go next. As a side note, during the early hours in New York, the Nikkei released a report that the Bank of Japan was looking to debate readjusting yield curve control on Tuesday.

The Japanese are not happy about the Japanese yen being crushed the way it has been, but at the same time they are trying to fight higher interest rates and therefore engaging in quantitative easing. Quite frankly, they are the only major central bank that is doing that, so the Japanese yen will continue to struggle on the whole. The US dollar on the other hand, has a huge amount of interest rate strength behind it, therefore it does make a certain amount of sense that the US dollar would continue to climb against the Japanese yen. All things being equal, I do think that we eventually break out to the upside, but if the market were to continue to see a lot of interest rate strength in the US bond market, eventually it will overwhelm the Japanese.

Underneath, we have the 50-Day EMA sitting right around the ¥147.80 level and should offer a bit of a floor in this market. If we were to break down below that ¥147.80 level, then the market is likely to continue to go much lower. On the other hand, if we were to turn around and show signs of life, then the ¥152 level is an area that’s going to be very difficult to break above. However, if we were to break above that level, then I think it opens up a move to the ¥155 level. I anticipate that the Bank of Japan will do something to try to jawbone this pair down, but it comes down to whether or not the market actually believes them, and whether or not they are actually willing to let interest rates rise in that country.

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