USD/JPY Price Forecast – US dollar rallies to open the week

The US dollar rallied overall during the trading session on Monday, and broke towards the ¥111.50 level early during American trading. It looks as if we may go looking towards the ¥112 level above, which should be somewhat resistance. I think short-term pullbacks should be buying opportunities, and I believe that the ¥111 level will offer support as well. However, this is a market that continues to be volatile, so I would expect short-term trades at best. The market looks likely to offer plenty of opportunity if you are patient enough, and perhaps even go to the ¥113 level as the interest rate differential between the two economies only widens.

I would keep my position size small, because quite frankly there is enough uncertainty and volatility out there to make your life difficult. This market of course will continue to be influenced by the Asian situation when it comes to Sino-American relations, but at the end of the day I think that the US dollar will continue to strengthen against the Yen mainly because of the Federal Reserve raising interest rates several times over the course of the next year, while the Bank of Japan is at least one year away from tightening monetary policy, let alone raising interest rates. I believe that this pair continues to be a “buy on the dips” type of situation. This market continues to be difficult, but I do have an upward proclivity in general, and I think the longer-term fundamentals will have this market trying to reach ¥115 level by the end of the year.

USD/JPY Video 07.08.18