USD/JPY Forecast – US Dollar Gives Up an Early Gain

USD/JPY Forecast Video for 28.04.23

US Dollar vs Japanese Yen Technical Analysis

The US dollar rallied early during the trading session on Thursday but gave back the gain to show signs of exhaustion. The 50-Day EMA sits below, which could also offer a bit of support. It’s probably also worth noting that the candlestick for the Wednesday session was a hammer, which shows signs of support as well.

If we do break above the top of the range for the trading session on Thursday, then it’s possible that we could go looking to the ¥135 level. The ¥135 level is an area where we’ve seen quite a bit of action previously; therefore, you would expect to see a significant amount of resistance. If we can break above there, it opens up the possibility of moving to the ¥137.50 level. You should also keep in mind that the US dollar has a lot to do with where we go next, and of course, the interest rates in that country, which continue to stay stubbornly high, and, therefore they give the US dollar a bit of a boost over the longer term.

Furthermore, you have the Bank of Japan sticking to its guns when it comes to the yield curve control policy, meaning that they are going to keep the 10-year yield at 50 basis points or lower, which means that when interest rates are to rise, they have to print more currency to buy bonds and drive down the yield. Doing so floods the market with the Japanese yen and drives down the price.

From a technical analysis standpoint, we are sitting at a couple of major moving averages, and of course, you can make an argument that a double bottom pattern could be formed as well. If the market finally takes out the ¥137.50 level, it likely becomes more of a “buy-and-hold” scenario. With that being the case, I think you’ve got a situation where you are looking for dips to offer an opportunity to pick up “cheap dollars”, especially if the Federal Reserve continues to be tight and continues to see reasons to keep the market as tight as possible to fight inflationary pressures in the United States.

For a look at all of today’s economic events, check out our economic calendar.