USD/JPY Forecast – US Dollar Continues to Look Upwards Against Yen

US Dollar vs Japanese Yen Technical Analysis

The U.S. dollar has rallied slightly in the early hours on Thursday, but I think at this point in time, we are just simply killing time, forming a little bit of a perhaps ascending triangle against the Bank of Japan’s intervention that we had just a few weeks ago. Ultimately, this is a market that continues to find plenty of buyers on dips and that should continue to be the case due to the fact that the interest rate differential favors the US dollar so drastically. The Bank of Japan does have a meeting Friday morning and that could cause some noise, but quite frankly, if we pull back from here, I’m looking to buy more.

The 50 day EMA is just above the 155 yen level, and I think at this point, that should offer a little bit of a floor in the market. If we were to break down below there, then it’s potential move down to the 152 yen level, which I think is a major amount of support just waiting to happen.

To the upside, if we can break above the 158 yen level, then we could go looking to the 160 yen level, which is basically the level that the Bank of Japan decided to defend. With this, I think you’ve got a situation where you’re trying to buy dips, and eventually waiting to see if we can break that crucial 160 yen level, because that opens up the next leg higher, and allows for traders to really get aggressive. Remember, you get paid at the end of every trading session to hold this pair, and that does matter.

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