USD/JPY Weekly Forecast – US Dollar Gives up Some Gains After Initial Surge

USD/JPY Forecast Video for 08-01-2024

US Dollar vs Japanese Yen Weekly Technical Analysis

The US dollar has rallied during most of the week against the Japanese yen, breaking above the crucial 145 yen level. This is an area that previously has been both support and resistance, so the fact that it is offering resistance on Friday of the week is not a huge surprise. If we can break above the top of this candlestick, then we can go much higher. I think at that point we probably look towards the 150 yen level. On the other hand, if we break down below the 140 yen level, extensively the bottom of this candlestick, then I think we go much lower and at that point in time could drop all the way back down to the 130 yen level over the longer term. A lot of this will come down to the US dollar in general and of course the 10-year yield.

I do expect a lot of volatility, but that’s nothing new for this market. Ultimately, this comes down to the fact that the yield differential still favors the US dollar, but a lot of traders are out there trying to price in the idea that the Federal Reserve is going to loosen monetary policy, and therefore the interest rate differential may shrink. Regardless, I don’t have any interest in shorting this market until we break down below that crucial 140 region, something that we are nowhere near doing right now.

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