USD/JPY Price Forecast – US Dollar Looking For a Bottom

The US dollar has rallied a bit during the session on Wednesday, hanging around the ¥107.50 level. However, we have given back some of those gains, so it shows just how unstable the entire situation is. The US dollar against the Japanese yen typically measures risk appetite, which of course has been all over the place as of late. Ultimately, I do think that the market is trying to find a bottom, but I think unfortunately that bottom is much lower.

USD/JPY Video 05.03.20

When you look at the longer-term charts, the ¥105 level makes a much more convincing bottom from a longer-term standpoint, and therefore I think it’s probably best to look there for some type of bounce due to the fact that we have been bouncing around between there and the ¥115 level for ages. The ¥110 level was fair value, but it has been sliced through so quickly that I anticipate it will be difficult for traders to look at it with sincerity going forward.

I anticipate that although the markets have shown extreme resiliency as far as risk appetite is concerned, the wild swings that we continue to get will eventually have people washing their hands of anything risk related, and that will weigh upon this pair. The 200 day EMA looks to be offering significant resistance at the ¥108.30 level, and therefore I think that’s probably about as high as this pair will rally in the short term. If the market did somehow break down below the ¥105 level, that would be an extraordinarily negative sign and could send this pair tumbling. At that point, I’d be looking for the Bank of Japan to get involved.