USD/JPY Forecast – US Dollar Continues to Look Bullish Overall After Retail Sales

US Dollar vs Japanese Yen Technical Analysis

The US dollar has bounced a bend during the trading session on Tuesday against the Japanese yen, as the retail sales numbers have come out hotter than anticipated in in the United States, thereby suggesting that inflation continues, thereby suggesting that the Federal Reserve is going to continue to have to be somewhat tight with its monetary policy.

Regardless, it doesn’t really matter because the Japanese yen itself is toxic. We have formed a hammer at the 50 day EMA during the trading session on Monday, and now it looks like we’re going to follow through with some type of recovery. I do think eventually we will try to get back to the ¥160 level, but it may take some time to get there.

Short term pullbacks should end up being buying opportunities as the interest rate differential continues to get you paid at the end of every session. That being said, make sure that you get paid at the end of every session. Several brokers have stopped paying swaps in this pair because it comes out of their accounts. So, you have to be very cautious with who you decide to trade with.

The pair ultimately, though, will be driven by institutions that do get swap because they just simply take their large amount of business somewhere else in that environment. Even if we were to break down here, the ¥155 level underneath ends up being a massive support level. So, you have to be cautious about that as well. I just think that invites more buying. The idea of buying the Japanese yen right now against pretty much any currency in the world is untenable.

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