USD/JPY Weekly Forecast – US Dollar Testing Bank of Japan Resolve

USD/JPY Forecast Video for 23.10.23

US Dollar vs Japanese Yen Weekly Technical Analysis

The US dollar has pulled back just a bit during the course of the trading week, only to turn around and show signs of life. The ¥150 level above is a barrier that traders are struggling with, but I think given enough time the market is likely to continue going higher. Breaking above the ¥150 level opens up the possibility of a move to the ¥152 level, which is where the market had pulled back from during the last massive bullish run.

Underneath, if we were to break down below the bottom of the candlestick, then the ¥147.80 level would be a significant support level based upon recent action, therefore I think you need to look at it through the prism of trying to find “cheap US dollars.” All things being equal, the interest rate differential between the US dollar and the Japanese yen will continue to be a major driver, so I do think that eventually we take off. The Bank of Japan has recently been buying bonds, keeping interest rates lower, which is direct quantitative easing.

That being said, the market is going to be very volatile, and it is a little bit overdone. It would not be overly surprising to see the market consolidate for a while in this general vicinity, as we are trying to build up enough pressure to go higher. If we break down below the ¥147.80 level, then I think the next major support level is near the ¥145 level. Ultimately, this is a situation where the market has gotten a little ahead of itself, so some churning is probably more likely than not.

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