USD/JPY Weekly Forecast – US Dollar Gives Up Early Gains for the Week

USD/JPY Forecast Video for 12.12.22

US Dollar vs Japanese Yen Weekly Technical Analysis

The US dollar has rallied significantly during the trading week, to revisit the gap from a few months ago. That being said, the ¥137.50 level has been important multiple times, and has offered a significant amount of resistance. This is just as true as the ¥135 level offering support. That being said, the question now is whether or not we can continue to rally, or if the uptrend is over?

I think a lot of answers will appear at the end of the Wednesday session after the Federal Reserve has its meeting, announcement, and of course press conference. Furthermore, you need to pay close attention to the interest rate markets, because most of what we are seeing here is the Japanese fighting rising rates in various amounts of intensity. After all, they are trying to keep the 10 year JGB down to 0.25%, which is necessary to keep the debt markets in Japan under control. By doing so, they are buying unlimited bonds, meaning that they are printing unlimited yen. If yields globally start to drop, that puts less pressure on the BOJ.

On the other hand, if we start to see inflation rise again, we could see the market go higher, perhaps reaching the ¥140 level, maybe even ¥142.50 level. We have seen a vicious pullback, but quite frankly the market had been so overbought it’s ridiculous. In fact, it’s likely that the Japanese yen will end up down about 15% for the year, which despite the fact that we have seen a big selloff in this pair, is an astronomical whipping for the yen year over year.

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