USD/JPY Price Forecast – The US Dollar Gives Up Early Gains

US Dollar vs Japanese Yen Technical Analysis

The US dollar initially rallied against the Japanese yen during Thursday trading but gave back those gains as it looks like we are hell-bent on testing the crucial ¥127.50 level. That being said, the market is likely to continue its bullish run over the longer term. A lot of this comes down to the interest rate markets, as the 10 year yield has dropped ever so slightly. If we break down below the ¥127.50 level, there are still several areas where I see potential support.

The first place that I would be looking for buyers to return would be the 50 Day EMA. It currently sits at roughly ¥126, and is backed up by the ¥125 level just below. The ¥125 level would obviously have a lot of psychology attached to it, as well as previous action. The market will continue to be bullish overall longer-term standpoint, due to the fact that the interest rate differential between the two economies continues to be massive, and of course you have to realize that the Bank of Japan is going to do everything they can to drive those yields at or below the 0.25% level.

In other words, they are printing currency by soaking up all of those bonds. This drives down demand for the yen, and at the same time we have the Federal Reserve which looks to be tightening monetary policy, causing demand for US dollars as there is a bit of a shortage of the moment. This does not mean that the market cannot pull back, just that shorting it is not even a possibility at this point in time.

USD/JPY Price Forecast Video 20.05.22

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