USD/JPY Forecast – US Dollar Continues to Grind Higher

US Dollar vs Japanese Yen Technical Analysis

The US dollar has been strong over the last four sessions in a row against the Japanese yen as we continue to see traders bet on the interest rate differential between the two currencies to continue paying them. Yes, the Bank of Japan did get involved recently and intervene. That being said, it was a short-term move and it’s going to be difficult for the Bank of Japan to actually do anything of true lasting resilience.

But quite frankly, all that can do is slow the situation down. It’s not necessarily a scenario where they can turn the market on a dime. After all, the interest rates in Japan absolutely positively have to stay low in an environment where the Japanese government is so heavily indebted, it’s almost impossible to pay any type of interest.

Short-term pullbacks should end up being a buying opportunity and I think that the 155 yen level should offer a short-term floor. After that, then you have the 50-day EMA and what I believe is a massive floor, perhaps even the hard floor at 152 yen. I don’t think we get down there, but if we did reset the area, I think we would make huge decisions at that point.

If we can continue to go higher than the 158 yen level gets targeted and then eventually 160 yen. There is the threat of potential intervention, but really at this point in time, it doesn’t make sense to try to short this market because the trend is obviously bullish and of course you have to pay for the privilege of shorting this pair which is something that institutional traders won’t be doing.

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