USD/JPY Price Forecast – US Dollar Rips to The Upside

The US dollar has rallied rather significantly during the trading session on Friday to reach towards the ¥105 level, threatening a major barrier. The 200 day EMA sits just above this level, so it should not be a huge surprise that we have pulled back just a bit. That being said, I do think that it is only a matter of time before we have to make a decision as to whether or not we can break above there. If we do, then we could be talking about a major trend change and a “buy-and-hold” type of opportunity.

USD/JPY Video 01.02.21

On the other hand, if we do continue to see sellers at the ¥105 level, then this could end up being a nice selling opportunity. There are a whole host of reasons to think that perhaps we will have to make a decision rather soon, and the path of least resistance certainly will be to the downside. However, the US dollar is oversold against most currencies, not just the Japanese yen so the relief rally did make a certain amount of sense anyways. To the downside, the initial target would be ¥104, as it is where the 50 day EMA is sitting and of course an area that had previously been resistance so it should be support.

Ultimately, this is a market that is trying to figure out whether or not it wants to go higher, but it has got some work to do if it truly wants to make that happen. Short-term charts might be useful for entries to the downside. If we get a daily close significantly above the ¥105 level, then we could be turning things around finally.

For a look at all of today’s economic events, check out our economic calendar.