USD/JPY Forecast – US Dollar Continues to See Buyers

US Dollar vs Japanese Yen Technical Analysis

The US dollar has tested the 200 day EMA against the Japanese yen in the early hours of Thursday, but we have to worry about the CPI numbers coming out, showing signs of inflation or perhaps a cooling inflationary situation in the United States. With this being said, the market is likely to continue to see more of a buy on the dip situation as the Bank of Japan has essentially admitted that it cannot raise interest rates anytime soon. Because of this, I find it hard to believe that the Japanese yen will be moving into a position of strength anytime soon, unless there is a massive “risk off event.”

So, what this means is that even if the Federal Reserve does cut a bit in the future, maybe 25 basis points or whatever, the interest rate differential still favors the US dollar quite drastically. This recent move has been rather impressive, so I do believe that if we pull back, that will just attract more value hunters because quite frankly, the 150 yen level I think is a gateway to much higher pricing, then the market is likely to continue to run much higher.

The initial stop would be the 152 yen level, and then after that, the 155 yen level. Underneath, I think we have plenty of support at 147.50 and the 50-day EMA. At this juncture, I have no interest whatsoever in shorting this pair.

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