USD/JPY Weekly Price Forecast – US Dollar Falls Hard Against Japanese Yen

The US dollar has broken down significantly during the week, reaching down towards the ¥105 level. That is the bottom of a larger consolidation area, so the question is whether or not we can continue to break down? I do think that it is likely that we will see that happen, because we have tested this area so many times. That being said though, the market needs to bounce a bit because it can’t go in one direction forever. Two weeks go by and we have lost 600 pips in a pair that had done almost nothing for ages. With this, waiting for an opportunity to start selling at higher levels makes quite a bit of sense. For myself, I will be looking to sell closer to the ¥107 level if we do in fact get that move.

USD/JPY Video 09.03.20

Alternately, if we break down from this level, I think the best thing that a longer-term trader can do is look for the opportunity to play the bounce. You simply can’t chase the trade all the way down here as the Bank of Japan has a long history of intervening below the ¥105 level. The closer this pair gets that the ¥100 level, the more likely it is that the Bank of Japan either intervenes directly or does some type of side monetary action to weaken the Japanese yen. In a heavy export economy like Japan that is dealing with a global slowdown, the Japanese yen gaining the strength it has is not something that they can deal with for very long.