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

US Dollar vs Japanese Yen Technical Analysis

You can see that the dollar continues to show massive amounts of strength against the Japanese currency as we are now well above the 155 yen level. Ultimately, this is a market that the interest rate differential will continue to cause major issues for the Bank of Japan and the Japanese yen. So, with that being said, I think it’s probably only a matter of time before we reach the highs again. And now I would anticipate that the 155 yen level could be short-term support. Keep in mind that the Bank of Japan has intervened from time to time over the last couple of weeks, but really at the end of the day, there’s only so much they can do.

After all, institutional investors get paid to hang on to this pair as the interest rate differential is wide enough to make the risk of intervention worth it. Furthermore, if you are not overly levered, a 100 pip pullback won’t necessarily hurt you. The 50 day EMA sits below and just above the crucial 152 yen level, we had seen the market turn around. So, I think all of that combines quite nicely for a market that remains buy on the dip.

I do think eventually we break the highs and go much higher than this, but perhaps the Japanese just got a little bit nervous about the extreme pace of strength that we had seen against its currency. Ultimately, we could go as high as 200 yen until something breaks. So, with that being said, I think this remains a very bullish market.

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