USD/JPY Forecast – US Dollar Continues to See Massive Pressures

US Dollar vs Japanese Yen Technical Analysis

The US dollar initially rallied against the Japanese yen during the trading session on Friday, but as the PCE core index came out weaker than anticipated, traders have started to sell off the dollar again. Nonetheless, I believe this is a very noisy area that could end up being a bit of a bottoming pattern, but we’ll just have to wait and see how that plays out. With this being the case, I think you have to be very cautious, but also recognize that this is a market that is in the process of trying to find its floor.

In general, if we can stay above the 140 yen level, I think this is a market that’s in pretty decent shape to make a recovery. And when you zoom out, you can see that the market has bounced from a trendline. So given enough time, I do believe this is a market that tries to recapture the 145 yen level, because while the situation in the United States seems to be deteriorating, the reality of course is that the Bank of Japan sat still.

As long as that’s the case, I think you’ve got a real shot at this market turning things around and rallying over the longer term. Nonetheless, if we were to break down below this trend line and the 140 yen level, then I think you’ve got a shot that the market could break down to the 135 yen level. I don’t really believe that will be the case, but it is something worth watching. If that happens, I would anticipate that the Japanese yen will continue to be a strengthening and more of a risk off signal.

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