USD/JPY Forecast – US Dollar Continues to Attempt to Rally Against The Yen

US Dollar vs Japanese Yen Technical Analysis

The US Dollar initially rallied a bit during the early hours on Tuesday, but did give back the gains as we reached towards the 145 yen level. If we can break above the 145 yen level, then the next barrier will be the 50 day EMA. Short term pullbacks should be buying opportunities, especially near the 142 yen level. In general, this is a market that is a very noisy bottoming pattern, and I think a situation where things will be noisy and difficult, but the interest rate differential between the United States and Japan continues to favor the green bank and you do continue to get paid to hang on to this pair.

The volatility of course will be rather brutal, but it normally is. After we had seen the massive sell off due to the Bank of Japan pretending like they were hawkish, this is to be expected as the market tries to sort out everything that’s going on. The question now is just how much will the Federal Reserve be cutting rates? Because quite frankly, they will stoke inflation if they keep it up. And at that point, we could have major issues where they have to really tighten rates.

So, all things being equal, I do think we will eventually rally, but I also recognize that this is going to be a situation that’s going to take some time to play out. If we get a close below the 140 yen level, that would be extraordinarily negative. But right now, it does look like we’ve got quite a bit of fight left in this pair.

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