USD/JPY Forecast – US Dollar Continues to Recover Against the Yen

USD/JPY Forecast Video for 19.12.23

US Dollar vs Japanese Yen Technical Analysis

The US dollar has recovered a little bit against the Japanese yen during trading on Monday, perhaps in a bid to either stabilize, or perhaps more importantly, get prepared ahead of the Bank of Japan announcement. There are a lot of people out there who have made serious money shorting this pair, especially now that the Federal Reserve has acquiesced to Wall Street’s desire for cheap money. If that’s going to be the case, that does put a little bit of down pressure on the US dollar, but the question now is whether or not the Bank of Japan is serious about normalizing rates? We will know in the next 24 hours and it is probably worth noting that there have been several hints that they are going to do so, only to be disappointed.

If the Japanese disappoint this time, they will, much like the Americans, destroy all credibility in the central bank, and it’s likely that we will see this pair rally somewhat. That being said, the real action is probably going to be in other pairs such as AUD/JPY, NZD/JPY, and GBP/JPY, as those central banks have not suggested that they were going to be loosening monetary policy anytime soon. Quite frankly, I’m going to use this chart as a bit of a barometer on how to trade the Japanese yen, even if I don’t trade this particular pair.

Above, we have the 200-Day EMA near the ¥144 level, and below we have obvious support near the ¥141 level. As the market continues to bounce around this area, we also are threatening a longer-term trend line that will obviously capture a certain amount of attention. At this point, it is worth noting that we need to see what the Bank of Japan has to say before we can put any money to work, and then we have to worry about liquidity between now and the end of the year. The central banks around the world have made a mess of the global monetary system, and we are now starting to see all of their labor bear fruit.

For a look at all of today’s economic events, check out our economic calendar.