USD/JPY Price Forecast – US Dollar Breaks 105 JPY

The US dollar has rallied a bit during the trading session on Tuesday to challenge the ¥105 level. This is an area that has been important multiple times and of course has a certain amount of psychology behind it. Whether or not we can break above here is a completely different question, but we are certainly trying. The 200 day EMA is just above, and that could come into play as well. In other words, there is a lot to unpack here and quite a bit to try to chew through. If we can continue to go higher and perhaps even break above the 200 day EMA, this of course would be a major turn of events in this pair.

USD/JPY Video 03.02.21

You can make out that there was a downtrend line that was broken, but quite frankly that is not enough to get overly excited to the upside. You can also make the argument that even if this market does eventually take off to the upside, we are a little bit overextended in the short term. Part of this is probably due to interest rates in the United States rising, and part of it is also probably due to the fact that stimulus is not going to be as big as initially thought, thereby causing a bit of a repricing of the dollar in general.

To the downside, I believe that the ¥104 level could be a target if we break back down with any type of significant velocity. If that happens, I think the move could be rather quick, but I also expect the ¥104 level to offer quite a bit of support. I think the one thing you can probably count on is a lot of choppiness in both directions.

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