USD/JPY Forecast – US Dollar Drops Against The Yen

USD/JPY Forecast Video for 22-12-2023

US Dollar vs Japanese Yen Technical Analysis

The US dollar has fallen rather significantly during the trading session on Thursday, as we continue to see interest rates in the United States drop. All things being equal, this is a situation where the bond market is trying to show that the Federal Reserve is going to loosen monetary policy next year, and therefore we will continue to see the US dollar drop a bit. The uptrend line underneath obviously offers a lot of support, right along with the ¥142 level.

The size of the candlestick is rather negative, but at this point in time, if we were to break down below the uptrend line, it could kick off a much deeper correction. In general, this is a scenario that the market is paying close attention to the 200-Day EMA. The market breaking above there would obviously be a very bullish sign, opening up the possibility of a bigger move to the ¥145 level. This is a fight between 2 very soft central banks, so quite frankly, at this point it’s more or less going to be a situation where the markets are trying to sort out where we go forward, with the Bank of Japan not bothering to tighten monetary policy, and of course the Federal Reserve looking to bring down their tight monetary policy. In other words, this is going to be a fight between 2 currencies that are more likely than not going to lose value against most other ones.

Ultimately, this is a market that continues to see a lot of choppy behavior, and therefore I think we have a situation where we have a lot of choppiness, and quite frankly some type of volatility that will make this pair a little difficult. I do believe that other currencies will do better against the yen than the US dollar, but ultimately it will be interesting to see whether or not this area offers significant support. Ultimately, this is a market that I think will have to make a bigger move, but right now it certainly looks like we are going to make a serious threat to the support level underneath. In general, I think we need to see the market make up its mind before trading.

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