USD/JPY, USD/CAD and GBP/USD Forecasts – US Dollar Fighting Back on Wednesday

USD/JPY Technical Analysis

The US dollar has rallied against the Japanese yen in early trading on Wednesday, as we are now cleanly above the 158-yen level. This might be one of the most important charts in the forex world right now because if we break the 160-yen level, that sends the market much higher and I believe could see the yen break apart pretty drastically. In fact, a clearance of that level could open up a move to roughly 250 yen. That’s how big of a resistance barrier it’s been—it goes back to 1990.

It’s a little bit above 160 yen but it’s in that general neighborhood. The fact that we continue to grind higher tells me that there’s a real problem here just waiting to happen. And if the yen gets eviscerated, that could cause financial problems in multiple markets. So, I think this is a chart that’s worth watching. In the meantime, I buy short-term dips because you do get paid to hold this pair.

USD/CAD Technical Analysis

The US dollar is down against the Canadian dollar, but you can see over the last 3 days it had started to form a little bit of a cushion here. The oil shock seems to be wearing off a little bit, so maybe that pushes back a little bit on Canadian dollar strength, but this pair’s a little bit different anyways because of the fact that the Americans produce 14 million barrels of oil a day, so it doesn’t have the same effect here as it does in other pairs. Right now, though, I think we’re just simply consolidating in a 250-point range. We are closer to the bottom than the top and we do continue to see buyers come in and try to support the dollar. I’m looking for a bounce.

GBP/USD Technical Analysis

The British pound is pretty choppy during the trading session. It’s up just barely, but it is off its highs and it looks like the pound might roll over back into the previous consolidation.

So, this is another situation like the Canadian dollar where the dollar is fighting back and had recently seen quite a bit of success. We could see a repeat of that. Keep an eye on the 200-day EMA. It seems like the market is using it as a bit of a magnet for price. If we were to break above the 1.35 level, that would be a very bullish sign, but you can see we have been repelled twice from that area.