USD/JPY Price Forecast – The US Dollar Continues to Threaten a Breakout

US Dollar vs Japanese Yen Technical Analysis

The US dollar initially pulled back during the trading session on Monday, showing signs of hesitation, but has turned around and rallied again. At this point, it looks like the ¥131 level will be threatened to the upside, and if we can break above that level, it’s likely that this market will continue to be more of a “buy-and-hold” type of situation.

The Bank of Japan continues to work against higher interest rates, thereby “printing yen” in a form of quantitative easing. This makes Japan a bit of an outlier, as we have seen so many central banks around the world tighten monetary policy. This is especially true when it comes to the Federal Reserve, so it makes perfect sense that we continue to see this pair try to go higher.

Underneath, it looks as if the ¥127.50 level is going to remain supported, especially as the 50 Day EMA approaches. If the market holds that area, you would have to assume the buyers are ready to come back into the picture. That being said, the market also appears as if it is a little stretched. Because of this, I think we are more likely than not going to see a bit of sideways action before the continuation of buying pressure.

The US dollar has taken a bit of a breather early during the Monday session, so that may be part of what is making everything so sluggish at the moment. Regardless, I certainly have no interest in trying to short this market, it is far too strong to do so. Ultimately, I anticipate this market reaching the ¥135 level sometime in the next couple of months.

USD/JPY Price Forecast Video 07.06.22

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