USD/JPY Price Forecast – US dollar rallies against Japanese yenThe US dollar rallied against the Japanese yen during the trading session on Thursday as a bit of a relief rally hit Wall Street. However, we are starting to see signs of trouble near the ¥112.50 level.
The US dollar has rallied against the Japanese yen during trading on Thursday, but as you can see is starting to give back some of the gains near the ¥112.50 level. Fear still grips Wall Street, and even though we had a nice pop at the open, stock started to give back their gains relatively quick. Because of this, I think we still have a lot of concerns when it comes to market participants and global trade now, so I think the sellers will continue to jump into the market every time we rally. In fact, it’s not until we get some type of truly good economic news, perhaps in the form of the Federal Reserve stepping back from an interest rate hikes, that Wall Street will be comfortable going higher for any protracted amount of time. I don’t see that happening anytime soon, so it’s very likely that we continue to see a drop in risk appetite overall. After all, it was the United States was propelling most of the risk appetite but quite frankly it looks as if that’s running out.
If that’s going to be the case, then it’s very likely that the dollar will continue to drift lower against the Japanese yen, as it is a bastion of safety. The alternate scenario is that we break above the ¥113 level, which would be very bullish. However, as I watch this market I realize it’s going to take a lot of effort for that to happen. While I’m not overly bearish this pair, I recognize that there is a lot of noise out there that will continue to throw it around.