USD/JPY Price Forecast – US Dollar Continues to Rally Against Yen

The US dollar has rallied again on Monday to kick off the week, as the greenback has been oversold. That being said, we are almost certainly heading towards the resistance area just above that could cause major issues. The area should be closer to the ¥104.50 level, with perhaps a resistance barrier extending all the way to the ¥105 level. After all, we have had a nice bounce but at the end of the day the US dollar has been so oversold for so long that a bounce was almost necessary. Ultimately, I think there are still a lot of concerns about stimulus weighing upon the greenback, and with the Democrats taking over all three branches of government, it means that spending will be fasting free over the next couple of years.

USD/JPY Video 12.01.21

With that spending, we should see a devaluation of the US dollar eventually, but at this point in time I think we are best served simply waiting on the sidelines for an opportunity to short this pair, thereby shorting the US dollar, at higher levels. The pair is still very much in a downtrend, although we certainly have seen a nice move over the last couple of days. At this point, I think it is just a simple function of people taking profit, as this trade has been chugging along for so long in one direction. It is not until we break above the 200 day EMA on a daily close that I would start thinking about buying this pair. If that happens, we have a long way to go to the upside.

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