USD/JPY Price Forecast – US dollar tests trendline

The US dollar has fallen a bit against the Japanese yen, testing a major trendline that I have been talking about. The ¥112 level underneath also offers a lot of support, just as the 200 day EMA does. Because of this, I find it very interesting that we are lining up right here ahead of the Federal Reserve interest rate decision, and more importantly the statement afterwards. We are waiting to see whether or not the Federal Reserve is going to continue on the path of three hikes next year, or if they are willing to be a bit more flexible. At the first signs of weakness in their conviction, I suspect that the Federal Reserve could inadvertently send this market much lower. I anticipate that the ¥110 level underneath is very important, just as the ¥114.50 level above is massive in its importance.

USD/JPY Video 19.12.18

If we do break down below here, it would jive well with what I’ve been hearing from some of my Wall Street contemporaries, that the Japanese yen could have a good year in 2019. This will be especially true if global growth continues to slow down, and of course the Federal Reserve suddenly seems a bit softer than originally thought. If that’s the case, this is a bit of a perfect storm for a trend line break, and a trend change back to the downside. When looked at from a historical perspective, the ¥115 level above has been a massive ceiling.