USD/JPY Price Forecast – US Dollar Bounces From 105The US dollar has bounced significantly from the ¥105 level, showing signs of resiliency in a move that has been driven by 10 year yields.
The US dollar has rallied a bit during the trading session on Tuesday to show the ¥105 level as being supported. Ultimately, this is a market that I do believe will try to continue to go higher, based upon interest rates in the United States rallying still. This is a pure play on the interest rate differential, as it continues to widen between the United States and Japan. The 200 day EMA sits just above and is flattening, meaning that we are simply trying to decide whether or not we can clear this area and continue to go to the upside. If we do, then we could go looking towards the ¥180 level over the longer term.
USD/JPY Video 24.02.21
To the downside, I believe that the 50 day EMA should continue to offer support underneath, as it is starting to curl to the upside and it certainly looks as if it is going to start showing a little bit of influence in this market. Underneath there, we have the ¥104 level offering significant support as well, so I think if we were to turn around a break down below that level, you would have to consider that the downtrend is reasserting itself.
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Currently, interest rates in the United States continue to rally, and that is very important for where we go next, as the interest rate differential continues to diverge, it should continue to put plenty of upward pressure. As things look right now, it appears that bond traders are willing to continue to sell the 10 year note, so keep an eye on that market, as it continues to sell off that will drive up rates and drive this pair right up with it.
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