USD/JPY Price Forecast – The US Dollar Is Heading Towards ResistanceThe US dollar has rallied significantly on Wednesday against the Japanese yen, breaking through the 50 day EMA. It looks very likely to test major resistance.
The US dollar has rallied a bit against the Japanese yen on Wednesday but is getting close to massive resistance. The ¥107.50 level continues to be an area where people have been selling this pair, and quite frankly I think that will continue to be the case. Yes, this has been in an impressive turnaround, but at this point in time there is nothing on this chart that tells me we are ready to take off. In fact, early in the US session we started to form a bit of a shooting star on longer time frames, so that suggests that perhaps we will rollover.
USD/JPY Video 13.08.20
Regardless, you cannot be a buyer until we break well above the 200 day EMA, something that we are not anywhere near doing right now. With that being the case, I am looking for shorting opportunities on smaller time frames, and I recognize that it is likely we will see a lot of volatility regardless. Somewhere between the ¥107 and the ¥107.50 level there should be a lot of selling pressure.
To the downside, I think this market could be looking towards the ¥106 level, perhaps even down to the ¥105.50 level. Looking at this chart, we have seen a significant sell off, and then a significant bounce. However, the Federal Reserve continues to flood the market with liquidity, which should drive down the value of the US dollar on the whole. If that is going to be the case, then it is difficult to imagine a scenario where this pair suddenly takes off to the upside.
For a look at all of today’s economic events, check out our economic calendar.