USD/JPY Forecast – US Dollar Continues to See Support Afterall

US Dollar vs Japanese Yen Technical Analysis

The US dollar rallied a bit during the early hours on Tuesday as it looks like the 145 yen level is going to continue to be a major barrier. If we could break above that level, then it’s likely that the market could continue to go higher, perhaps to the 147 yen level, maybe even the 150 yen level. If we pull back from here, it’s likely the market is likely to go looking at the 142 yen level. And that of course is an area that has been important more than once. The trend line underneath there has held up. So, it’ll be interesting to see how that plays out.

In general, I think you’ve got a scenario where traders will be very aggressive at times, but also will have to be very cautious with their position sizing. The Bank of Japan has recently decided not to cut rates, nor did they raise rates. So, it means that the interest rate situation coming out of Japan is going to continue to be a driver of yen weakness over the longer term.

Now, the Federal Reserve has cut interest rates by 50 basis points, but the question now is whether or not they continue to do so, or if inflation comes back into the picture and keeps the market to the upside here in this currency pair as the interest rate swap at the end of every day pays. I still believe that this is a market that you’re trying to buy, but you also have to be extraordinarily patient.

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