USD/JPY Price Forecast – US Dollar Testing Support Against Japanese Yen

The US dollar has fallen during the trading session on Friday again, reaching down towards the ¥106 level. This is a significant amount of support just waiting to be tested though, as we have seen this area form a bit of a “double bottom”, but ultimately, I think what we need to see is some type of catalyst to break things down. The US dollar is most certainly on its back foot, so if we can break down below this level, we could start to see this pair reach towards the ¥105 level, possibly even the ¥102 level.

To the upside, I believe that the ¥107.50 level continues to be an area of significant resistance, and any move towards that area will probably be sold into. While we have not broken down yet, the reality is that the sellers have been somewhat relentless when it comes to the greenback, and I think that will continue to be the way going forward.

USD/JPY Video 27.07.20

Ultimately, going into the weekend I would not read too much into the candlestick unless of course we break down significantly. Longer-term, I do think that we break down because of the Federal Reserve and its quantitative easing policies that continue to work against the value of the US dollar. Although Japan is very loose with its monetary policy, the Federal Reserve eventually gets what it wants given enough time. In the meantime, I would look to fade rallies for short-term trades, and would not be overly aggressive with my position size.

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