USD/JPY Price Forecast – US Dollar Continues Volatile Action Against Japanese Yen

The US dollar has rallied a bit during the course of the trading session on Tuesday to continue showing signs of strength against the Japanese yen, but the ¥110.50 level continues to be a major barrier for the bulls. Because of this, the market is likely to continue to struggle just above, and I would anticipate rather choppy and quiet trading until we get the CPI figures coming out of the United States to tell us where inflation is going in America.

USD/JPY Video 11.08.21

The ¥110 level underneath continues to be important as it is a large, round, psychologically significant figure, and an area that features the 50 day EMA. All things being equal it is going to continue to be a choppy market but ultimately one that needs to make up its mind sooner or later. When I look to the upside, the area between the ¥111 and the ¥112 handles features a massive amount of resistance it will be very difficult to overcome. If we were to break above the ¥112 level, that would signify that we are getting more of a “buy-and-hold” type of scenario, something that I do not see happening easily.

That being said, the CPI figure being extraordinarily hot may be enough of a reason to send the US dollar higher, mainly due to the idea of tightening as Japan continues to have ultra-loose monetary policy. To the downside, I believe that the ¥109 level will continue to offer a significant amount of support that we should be paying attention to as well. It does look like we have tried to top out recently, but obviously there is so much noise that it is difficult to hang on to a position at this point.

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