USD/JPY Forecast – US Dollar Gives Up Early Gains Above 200-Day EMA

USD/JPY Forecast Video for 13.04.23

US Dollar vs Japanese Yen Technical Analysis

The US dollar has initially tried to rally during the trading session on Wednesday but struggles to hang on to gain above the 200-Day EMA. The size of the candlestick shows just how tight things are, and the fact that the 50-Day EMA sitting just below also shows potential support. That being said, I do think that we’re in a situation where we will have to make a bigger decision, and if inflation and interest rates continue to rise over time, then you could see this market race higher. If we do take off to the upside, the most obvious target would be the ¥135 level.

Keep in mind that the Bank of Japan continues its yield curve control, making sure that interest rates stay at 50 basis points or less on the 10 year note. Ultimately, this is a situation where the Bank of Japan will have to step in and print more currency if they are to defend that level, and that could of course flood the market with plenty of supply. The more supply there is in the market, the more likely it is that the value of the yen will drop. That being said, it’s also worth noting that we have formed a double bottom recently, just as we did previously before the last shot higher. I do think we are getting closer to moving like that, but I recognize that the ¥130 level underneath it needs to be defended in order to show signs of life.

Regardless, this is a market that should be approached with a bit of caution because the volatility of this pair can get out of control at times. This will be especially true if traders start to worry about the overall global growth situation, and of course the bond market starts acting up yet again. Regardless, position size accordingly but I do think that there is a significant amount of upward pressure that will eventually prevail. If the market can break above the ¥135 level, it could very go well go looking toward the ¥137.50 level above there as a target.

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