USD/JPY Weekly Forecast – US Dollar Bounces for the Week

USD/JPY Forecast Video for 15.05.23

US Dollar vs Japanese Yen Weekly Technical Analysis

The US dollar initially fell against the Japanese yen during the week but has turned right back around, showing signs of life again. This makes perfect sense, considering that the Federal Reserve continues to be very tight, while the Bank of Japan continues to do everything it can to keep interest rates low. By doing so, they have to print Japanese yen in order to buy those bonds, keeping the JGB down to 50 basis points or less. With this, I think the situation continues to see a lot of Japanese yen being printed, and that of course works against the value of the Japanese yen. Because of this, there is a bit of upward pressure in this market.

If the market was to break above the top of the weekly hammer, then it’s likely that we go looking toward the ¥138 level above, which has been like a brick wall. If we were to break above that, then we would clear the top of the triangle, and open up a bigger move to the upside. In that environment, we could be looking at the ¥147 level before it’s all said and done, which is my target eventually. I don’t expect to get there anytime soon, but I think a retest of the high that we made last year is probably on tap unless of course the Japanese change their monetary policy quickly, or if the Federal Reserve steps away from its tight policy, something that I don’t expect to see from either one.

The 50-Week EMA is sitting right around the 133.50 again level and is rising, and of course we have the trend line just below there. In other words, this is more likely than not going to end up being a “buy on the dips” type of market, just as it has been for some time. Expect choppiness, but eventually I would anticipate that the buyers will overwhelm the sellers, offering a bit of momentum above that ¥138 level. As far as selling is concerned, I don’t have any interest in doing so at the moment, but would reevaluate things if we were to break down below the ¥132 level.

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