USD/JPY Weekly Price Forecast – US Dollar Continues Drive Higher

The US dollar has rallied significantly during the course of the week to break above the ¥110 level, showing signs of life yet again. Ultimately, the market looks as if it is going to try to go towards the ¥111 level, which is the recent high. If we can break above there, then it is likely that we could go much higher. We had recently bounced from the 38.2% Fibonacci retracement level, which sits at the 200 week EMA.

USD/JPY Video 31.05.21

Keep in mind that the pair rallying is a sign of risk appetite, so if traders continue to “feel good” about the overall markets, then it is likely that we continue to go higher. Pullbacks at this point in time should be thought of as opportunities, unless of course something changes rather drastically. I do not see that happening, but if we were to break down below the recent low at the ¥108 level, that would be a very negative sign. At that point, it is very likely that we could fall all the way to the ¥105 level.

All things been equal, I believe this is a market that clearly favors the upside, but we should probably be cautious about the overall attitude of the market and keeping an eye on things such as the stock market, bonds, and the like. Speaking of bonds, the interest rate differential between the United States and Japan also favor a move to the upside so I think it is only a matter of time before we not only reach the highs but eventually break out.

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