USD/JPY Forecast – US Dollar Plunges Against Yen to Find Support

USD/JPY Forecast Video for 21.11.23

US Dollar vs Japanese Yen Technical Analysis

The US dollar has fallen significantly to reach down toward the ¥147.80 level, an area that has been important a couple of times. We have bounced from there a bit, so it will be interesting to see how this plays out. At this point, the interest rate differential continues to favor the US dollar, but there’s a lot of hope out there that the Bank of Japan may begin to normalize interest rates. I don’t think they will, but that doesn’t keep the market from freaking out occasionally.

At this point, if we can turn around and recapture the ¥150 level, then the market could go look into the ¥152 level, which was the recent high. If we break above the ¥152 level, then the market could go look into the ¥155 level. All things being equal, I have no interest in trying to short this market, at least not until something fundamentally changes. While there are a lot of traders out there thinking that the Federal Reserve may keep their monetary stable, and therefore the next natural assumption by traders is that they are going to start loosening monetary policy. They are nowhere near doing that, so I think at this point you more or less have to look at this through the prism of the carry trade, and I think that carry trade will continue to reward you over the longer term.

This doesn’t mean that the market is going to suddenly take off to the upside, just that it is a situation where over the longer term it does favor the upside. I think at this point, we have a scenario where the “buy on the dips mentality” should continue to be a major factor, and therefore I don’t have any real reason to think that the market is suddenly going to break down.

In general, I do think that we are a little extended so we may be looking at more or less consolidation than anything else in order to work off some of the froth that is almost certainly in the market. That being said, I think you’ve got to look at this through the prism of a longer-term trend, and you need to be very patient looking for buying opportunities.

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