USD/JPY Forecast – US Dollar Continues to Strengthen Against The Yen

US Dollar vs Japanese Yen Technical Analysis

The U.S. Dollar initially pulled back a bit against the Japanese yen in the early hours on Friday, only to turn around and show signs of life. All things being equal, this is a market that I think continues to see a lot of volatility and quite frankly, that is going to remain a feature of this market, not a bug.

I recognize that with the Bank of Japan not being able to cut rates and the jobs number coming out hot, it does bode well for the carry trade over the longer term. Whether or not it plays out immediately remains to be seen but the 200 day EMA seems to have offered a bit of a short-term resistance barrier.

Above there, we have the 150 yen level, which I think will end up being a significant barrier. If we break above that, then I think it becomes a more buy and hold. Either way, I don’t have any interest in shorting this pair. I do think that the interest rate differential will continue to matter. As a result, I remain bullish and look for short-term dips as potential opportunities and try to run towards the 160 yen level over the longer term.

If we were to break down below the 140 yen level, then I think you’ve got a situation where the bottom could fall out. But right now, I don’t see that as very likely. I believe at this point in time, the uptrend is likely to reassert itself, and the buyers will continue to run things.

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