USD/JPY Price Forecast – US Dollar Choppy Against Japanese Yen

The US dollar has been all over the place against the Japanese yen during the trading session on Tuesday, as Japan went back to work after the Emperor’s birthday. That being said, the market is struggling to determine whether or not the US dollar is the safety currency, or if the Japanese yen is serving that function right now. Ultimately, this is a little bit different than the usual dynamic, because the more afraid that the markets become, the more likely they are to run away from the Japanese yen as the coronavirus is the main reason. Ultimately, if we get more of a “risk on” move, this pair also breaks higher in my estimation.

USD/JPY Video 26.02.20

At this point, the ¥110 level is what I look at as the “fair value level” as far as the longer-term trading is concerned as the ¥105 level underneath is the support level, while the ¥115 level above is the resistance barrier. This means that the market will continue to be attracted to the ¥110 level, and therefore a bit of a pullback may not be that surprising, but I would anticipate that there seems to be a lot of interest and demand down at the ¥110 level. Another thing to pay attention to is the 10 year note in the United States, which is reaching historic lows as far as yield is concerned, meaning that there is a lot of demand for safety out there. That does drive up the value of the US dollar, so ultimately I still favor the upside on the whole.