USD/JPY Forecast – US Dollar Continues to Find Support Against The Yen

US Dollar vs Japanese Yen Technical Analysis

The US dollar has gone back and forth in the early hours on Monday as we continue to see a lot of noisy behavior. With that being said, I think the market is more likely than not going to continue to try to build some type of basing pattern as traders are looking to determine whether or not the Bank of Japan is done with its monetary tightening policy.

The fact that they had an interest rate decision on Friday and did hold still suggests that perhaps maybe their bark is much worse than their bite. And that’s generally the case with the Bank of Japan anyways. So, with that being said, I am still bullish of this pair long term, but when I say long term, I’m talking over the course of the next couple of years.

So, if we can break above the 145 yen level, then the market could go much higher. Short-term pullbacks I do think offer plenty of support near the 142 yen level, perhaps even the uptrend line. In general, I think this is a scenario where traders continue to look for a little bit of value and take advantage of it. Remember that the interest rate differential between the two currencies means that you do get paid at the end of every day, although you don’t get paid as much as you used to. So really at this point in time, I begin to wonder whether or not the carry trade comes back into vogue as traders try to take advantage of an obvious interest rate differential play.

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