USD/JPY Forecast – US Dollar Continues to Show Strength Against Yen

US Dollar vs Japanese Yen Technical Analysis

The US dollar has rallied just a bit during the early hours on Wednesday as it looks like we are threatening the 200-day EMA. By breaking above the 200-day EMA, we are more likely than not to challenge the 150-yen level which I think is the real prize here for the buyers.

The 150-yen level has a massive amount of resistance built into it from a psychological standpoint as well as the fact that the 200-day EMA sits just below it. If and when we can break above the 200-day EMA and the 150 yen level, I think this pair really starts to take off. I do think that this is probably what happens. The interest rate differential between the two currencies will continue to be quite wide, and therefore I look at short-term pullbacks as buying opportunities in the US dollar against the Japanese yen.

Underneath current pricing, we have the bottom of the hammer from the Tuesday session, right around the 147.50 yen level, and then again, we have the 50-day EMA that both come into the picture to offer support. If we break down below there, the 145 yen level then becomes even more supportive. In general, I do think we are bottoming, and I do think that the carry trade is going to start back up sooner rather than later, and I will be a part of it.

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