USD/JPY Price Forecast – US Dollar Recovering

The US dollar has initially fallen during the trading session on Wednesday but found buyers to come back in and pick it up against the Japanese yen as we continue to see a lot of volatility in this pair. The overall strength of the market has been rather impressive, so it should not be a huge surprise that we try to recover after the last couple of negative sessions. That being said, I do think that we are looking at a situation where we probably have a little bit further to fall, but I certainly would not be short of this market as it is far too strong to try to fight this type of attitude.

USD/JPY Video 08.04.21

The interest rate differential still of course favors the US dollar, but the longer-term outlook for this pair means that we may get a few pullbacks from time to time, and that does make quite a bit of sense considering that we had gotten so far ahead of ourselves. I think at this point, we are looking for support of candle’s in order to get involved on a daily close. That being said, I think that we are looking at a situation where we may have to do a little bit lower in order to offer value. I think it is difficult to imagine a scenario where you should be “paying up” for a trade, because quite frankly this is a very overbought position at this point so I would be a bit cautious about jumping in with both feet. With that being said, it is likely that we will see value if we are simply patient enough to find it.

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