USD/JPY Price Forecast – US Dollar Crumbles

USD/JPY Forecast Video for 08.12.23

US Dollar vs Japanese Yen Technical Analysis

The US dollar broke down significantly during the course of the trading session on Thursday, reaching down to the crucial ¥145 level. This is an area that previously has been important, so it will be interesting to see whether or not we can bounce. The 200-Day EMA underneath could be a significant support level, and therefore I think this is an area where we need to see some type of bounce. That being said, the market is at a precarious point, and of course we have the non-Farm Payroll announcement coming out on Friday.

That being said, I think that we need to see whether or not it shows us that the Federal Reserve may or may not have to loosen monetary policy, and of course if we get a weak jobs number that probably helps that theory going forward. Ultimately though, I think the 200-Day EMA could be a major issue as well, so we will have to wait to see how this plays out. I don’t like the idea of buying the Japanese yen in general, because I think the Bank of Japan is probably in worse condition than many other central banks when it comes to tightening, but a little bit of a correction might be in the cards due to the fact that the central banks are getting closer to each other. That’s maybe a bit of a stretch, but at this point I think we need to look at it through that prism.

If we were to break back above the top of this candlestick, I think it would be an extraordinarily bullish sign and could send the pair looking to the ¥149.80 level. If we get a daily close below the 200 Day EMA, then it might finally signal that the trend to the upside is over. I think regardless of what happens next you are about to see a lot of volatility, and it is probably worth noting that after Friday, we begin the decline into the holiday season when it comes to volume, and that probably will have a major influence on what happens next, assuming anything does at all. We may have a couple of days of volatility, followed by 10 days or so of quiet trading, so be aware that’s a potential reaction.

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