USD/JPY Price Forecast – US dollar continues to look soft against yen

The US dollar initially tried to rally during the day on Friday but found enough resistance at the previous support level to push the market lower again. The fact that we are now below the 200 day EMA and we are starting to see more downward pressure suggests to me that we are very likely to continue to see this move accelerate to the downside. One of the things that is probably helping this market keep from completely collapsing is the fact that we are heading into the holidays.

USD/JPY Video 24.12.18

A lower than expected final GDP figure is of course a major problem and won’t give any help to the US dollar. At this point, we have been looking at a potentially stronger Japanese yen heading into 2019 anyway, and this may be the final nail in the coffin. As the Federal Reserve has suggested that although it still plans on hiking interest rates, it is becoming more “data dependent”, that is a bit of a dovish tone, and with all of the global concerns going on right now, it makes sense that we would be looking at a strengthening Japanese yen.

The US/China situation will do any favors as well, and hedge funds who typically will try to borrow in Japanese yen are probably looking to send money back into that country. Overall, I suspect that this is the beginning of a much larger move, with the initial move heading towards the ¥110 level. As long as we stay below the ¥112 level, I believe that the sellers will continue to run the show.