USD/JPY Price Forecast – US Dollar Drifts Lower Against Japanese Yen

The US dollar has initially tried to rally on Friday but gave back gains rather quickly as we continue to see a lot of noisy behavior. The 50 day EMA sits right about where we are as I record this video, suggesting that there might be a little bit of technical support underneath. Furthermore, if the market was to fall from here it is likely that the ¥112.50 level would be supportive. That is an area where we have bounced from previously, and therefore I have to look at it through the prism of potentially offer a short-term floor in the market.

USD/JPY Video 20.12.21

That being said, if we do break down below the ¥112.50 level, then the market is likely to go looking towards the ¥111 level, possibly even the 200 day EMA. After that, then we have the ¥110 level offering support and is essentially the end of the uptrend as far as I can see. If we were to break down below there, then I think this pair could be in a bit of a freefall. Keep in mind that this pair is highly sensitive to risk appetite, and therefore rises when other markets to, just as it falls when other ones fall. The Japanese yen is considered to be a “safety currency”, so therefore people will run to it in times of concern.

All things being equal, this is a market that will probably be somewhat noisy over the next couple of weeks, but it certainly looks as if it is starting to roll over a bit. As we head into the holiday season, this pair will lose liquidity.

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