USD/JPY Forecast – US Dollar Continues to See Pressures

US Dollar vs Japanese Yen Technical Analysis

The U.S. dollar has fallen rather significantly during the early hours on Wednesday, only to turn around and show signs of life. At this point, I’m paying close attention to the 142 yen level because it is an area that’s been important multiple times. The fact that we are turning around a little bit is a good sign. And if we can turn around and rally above this 142 yen level on a daily close, I think that might help things for the greenback. The CPI numbers come out on Wednesday, as do the PPI numbers on Thursday, and that could also have a major influence on where we go next.

Keep in mind the Japanese yen is far overbought, but recently we have worked off some of that overbought condition. So perhaps we can still break down, but it’s not until we get a daily close below the 141 yen level that I think we’re in the phase that would be a major breakdown.

If we do turn around, then the 144.3 level above is important. And then breaking above there, go looking to the 145 yen level, which in and of itself has been important more than once. All things being equal. This is a pair that still has a positive interest rate swap situation. And even though the Federal Reserve is likely to cut interest rates by 25 basis points later this month, it still very much favors the US dollar at the end of every day. So, we’ll just have to see how that plays out. It’s also worth noting that after the Federal Reserve’s interest rate decision on the 18th, just two days later we have the Bank of Japan stepping in and giving theirs, so things could be very noisy.

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