USD/JPY Price Forecast – US Dollar Reaching Towards Resistance

The US dollar has rallied significantly during the trading session on Thursday, reaching towards the ¥104 level. That of course is a large, round, psychologically significant figure that a lot of people will pay attention to, but we also have the 50 day EMA as well. All things being equal, I do believe that it is only a matter of time before we see some type of exhaustion come into play and get an opportunity to start selling again. At this point in time, the market is likely to go down towards the ¥102.50 level ultimately, as we have seen a consistent “sell the rallies” type of scenario.

USD/JPY Video 08.01.2021

The 50 day EMA sitting above at the ¥104 level and should also attract a certain amount of selling pressure. We have been in a downtrend for some time, so therefore it makes quite a bit of sense that the sellers would return. After all, there is a lot of stimulus out there just waiting to happen in the United States, so it should continue to work against the value of the greenback. The downtrend is very strong and has been going for some time. Because of this, I think it is likely that the trend continues and therefore trying to work against it makes no sense.

Ultimately, as long as you have been willing to follow the trend, you have been making money in this pair and I just do not see that changing anytime soon. However, you should pay attention to the 10 year yields, because they have risen as of late and that could be the beginning of something a little bigger to the upside. At this point though, we still have a long way to go before you can start to think about taking long positions.

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