USD/JPY Forecast – US Dollar Continues to Attempt to Stabilize

US Dollar vs Japanese Yen Technical Analysis

The US dollar has rallied slightly in the early hours on Tuesday against the Japanese yen as we are bouncing around above the 140 yen level. If we can turn around and rally to take out the 142 yen level on the upside, it’s possible that we could go much higher. That being said, the market is likely to be in a scenario where as the FOMC interest rate decision is released on Wednesday, it should be very volatile. And then people will be paying close attention to the press conference afterwards.

However, it’s probably worth noting that we also have the Bank of Japan on Friday, so it’s very likely that the market is going to continue to see a lot of questions. At this juncture, I do think you have to look at this pair as one that looks very likely to be noisy over the next couple of days, but I am looking for a potential buying opportunity because we are at a major uptrend line.

On the other hand, if we were to break down below the 139 yen level on a daily close, then I think the market falls apart, perhaps reaching down to the 135 yen region. All things being equal, this comes down to risk appetite and perhaps what the Federal Reserve does, because quite frankly, I think the Bank of Japan can only do so much as far as tightening is concerned. So big questions to be asked in an area of major inflection.

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