USD/JPY Price Forecast – US Dollar Continues to Strengthen

The US dollar has had a wild day during the day on Friday, as we continue to bounce around the ¥109 level. This is an area that has been a bit of a magnet for price as of late, and as a result it should not be a huge surprise to see that we have raced right back towards it. Keep in mind that this pair is highly sensitive to the interest rates coming out of both countries, and as a result I think it does make quite a bit of sense that the markets will continue to see this noisy behavior going forward.

USD/JPY Video 22.03.21

As long as the 10 year yields in America continue to rise, I think that we are going to have a serious issue when it comes to the US dollar strengthening. In fact, although it is “conventional wisdom” that the US dollar is going to start falling, it is starting to act completely opposite of that. Traders around the world have been massively short of the greenback, and we may have a reversal on our hands. It is a little early to call that, and certainly you cannot use this particular pair to make that call, but we are seeing US dollar strength everywhere show up in bits and pieces.

If the 10 year yield breaks the 1.75% level, I believe that the US dollar will suddenly overtake several currencies around the world. We have already seen a lot of strength here but that should not be a huge surprise considering that the JGB market offers very little in the way of yield. I like the idea of buying dips in this market, with an eye on every 100 pips as being a potential support level.

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