USD/JPY Price Forecast – US Dollar Pulls Back Slightly

The US dollar has pulled back a bit during the trading session on Monday as traders came back to work. Keep in mind that Europe was closed for Easter Monday, so liquidity may have been an issue at one point. Nonetheless, the Americans are back and therefore it looks like we are going to perhaps get a little bit of a short-term pullback. That short-term pullback should be an opportunity to pick up a little value though, and we have recently broke above the top of a major downtrend line, so all things being equal, I think this is a market that will be a “buy on the dips” type of situation.

USD/JPY Video 06.04.21

To the upside, the ¥111 level is an area that could cause a certain amount of resistance, eventually reaching towards the ¥112 level. I do believe that the market will eventually try to make a bigger move, and at this point I think this is mainly a function of a market that has been overdone. That being said, the yield differential between the United States and Japan continues to extend, and therefore it is probably very likely that we continue to go much higher.

If we break down below the ¥108 level, then I may consider the trend broken but right now it certainly looks like upward momentum has really taken over, and with that being the case it is difficult to imagine being a seller of this pair anytime soon, but of course anything is possible so I will be keen to pay close attention to that level. It would have broken through the bottom of what looked a bit like a bullish flag that sent us to the current level.

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