USD/JPY Forecast – US Dollar Continues to See Barriers Against The Yen

US Dollar vs Japanese Yen Technical Analysis

The US dollar has pulled back quite a bit during the early hours on Friday as the trend line that we had tried to break through during the previous session seems to be holding now. At this point in time, we have a lot of questions as to whether or not the carry trade is going to come back and therefore, you’ll have to see whether or not there is enough momentum to break above the high of the Thursday candlestick to start buying.

If we can break above the 150 yen level that would also be a very bullish sign. Underneath we have plenty of noise extending all the way down to the 145 yen level, so I think this is a market that’s not going to break down easily unless of course there’s some type of panic. Keep in mind the Bank of Japan really can’t tighten monetary policy any further. So, it’ll be interesting to see how this plays out because if the yen carry trade is unwound and we find ourselves in a lot of trouble, then the question is what happens next? Well, my experience tells me sooner or later we build up another yen carry trade.

Remember you get paid to hang on to these pairs at the end of every day and a lot of institutional traders do take advantage of that, so it is something to be cognizant of. At this point, breaking the highs of the Thursday candlestick would be a very bullish sign. If we break down below the 146 yen level, then that could lead to further selling.

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