USD/JPY Weekly Price Forecast – US Dollar Gets Hammered

It is worth noting that the market had gone straight up in the air, and perhaps we are trying to find some type of balance. Based upon the range, that balance is roughly ¥107, or so. Right now, the biggest problem that you are going to have when it comes to trading this pair is that it has been moving wildly yet again. If you look back towards the beginning of 2020, we saw the same kind of nonsense back then as well. This is because the bond yield markets are going crazy occasionally, and that makes this pair do more the same.

USD/JPY Video 26.04.21

The 10 year yield in America and Japan need to be paid close attention to, as it is the interest rate differential that tends to drive this pair more than anything else. That is where you get the “risk on/risk off” attitude of the pair. In other words, bond yields fall when times are good, unless of course they fall rapidly. The same thing can be said when they rise rapidly, because then you start to worry about inflation. As the 10 year yield has been calming down a bit over the last three weeks, you have seen that this pair has followed right along.

That will continue to be the case, so therefore the 10 year yield in America is important to pay attention to, and then you need to see what kind of interest rate differential you get between that and the 10 year JGB. (Japanese Government Bond.) All things being equal, I think we are going to try to find some type of stabilization just below, but this is a pair that is very dangerous.

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