USD/JPY Price Forecast – US Dollar Continues to Fall Toward 50-Day EMA

USD/JPY Forecast Video for 12.07.23

US Dollar vs Japanese Yen Technical Analysis

The US dollar has fallen a bit during the trading session on Tuesday, to test the 50-Day EMA. This is an indicator that a lot of people pay close attention to, and it’s also worth noting that the market is testing the top of the bullish flag that sent it higher to begin with. We are at an inflection point that’s worth paying close attention to, so I think at this point we are trying to see whether or not the market can hold onto the trend or not. It’ll be interesting to see how this plays out, because the interest rate differential continues to see a wide gap between the two.

Looking at this chart, I think we could see a little bit of a bounce, and if we break above the top of the candlestick, that possibly opens up the move to the ¥142.50 level again. I have no interest in shorting this market, but I recognize that it’s not necessarily one you want to jump into right away. What I want to see is some type of bounce that I can take advantage of. Eventually, that will happen, and therefore sets out for the next leg higher. After all, the Federal Reserve is likely to raise interest rates 2 more times, while the Bank of Japan is nowhere near doing so. Beyond that, interest rates in the United States are set to stay high for quite some time, so remember that traders do get paid to hold this currency pair.

If we were to break down below the ¥138 level, then it’s possible that the entire trend is over, but that seems to be very unlikely at this point. Given enough time, I think we do see a bit of a bounce and a move to the upside, which I am more than willing to join, as the measured move of the bullish flag and the ascending triangle both suggest that this pair could go to the ¥148 level above. All things being equal, I think it’s probably only a matter of time before we get that move to the upside so I am waiting for signs to get involved.

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