USD/JPY Price Forecast – US Dollar Fighting to Break Higher Against Yen

The US dollar has rallied a bit during the trading session on Friday to break above the ¥105 level. Ultimately, this is a market that I think eventually continues to go higher if we can break above the highs of this past week. Once we break above that level, then it will be an official trend change, meaning that we could go much higher. At that point, I think that the entire situation changes. However, if we were to break back down below the previous downtrend line, then we could see this market fall rather hard. Nonetheless, it certainly looks as if we are trying to turn around and again.

USD/JPY Video 15.02.21

The market will probably be noisy though, especially if we are going to see a trend change. When a market changes trend, tends to be extraordinarily noisy, and could probably cause major headaches for those who are a little over levered. Because of this, the market is likely to see quite a bit of choppy behavior, but eventually that will work itself out. The interest rate differential between the two economies of course is starting to come into play as interest rates in the 10 year note are starting to rise. With that in mind, I do think there is a real shot that we go to the upside and go much higher. I do not think it is going to be an easy trade, but with that positive swap, you can typically take advantage of a potential bigger move as well.

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