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

US Dollar vs Japanese Yen Technical Analysis

The US dollar has rallied a bit against the Japanese yen in the early hours on Tuesday, as we continue to see quite a bit of upward pressure reestablish itself, quite frankly, this is a market that I just don’t see how you can get short of. And I do think that it is probably only a matter of time before you see the Japanese yen suffer again at the hands of the interest rate differential.

After all, we’re in an environment where the Bank of Japan just simply cannot do anything with its monetary policy that seems too aggressive. Yes, they could even raise rates 10 basis points but at the end of the day, the interest rate differential is still far too much for the currency to appreciate in a meaningful way.

So, with that being said, I think you have to look at this from the prism of offering value, and now that we’ve had this big sell off, I do think that buyers are going to come back into this market sooner rather than later. This will be especially true if the Federal Reserve meeting on Wednesday ends up being less dovish than expected. That could kick the whole next leg higher off. We’ll just have to wait and see how that plays out. We bounced perfectly from the 152 yen level and the 200 day EMA. So, I think at this point in time, it makes a lot of sense that traders are trying to push this market higher.

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