USD/JPY Forecast – US Dollar Pulls Back Against the Lowly Yen

USD/JPY Forecast Video for 07.09.23

US Dollar vs Japanese Yen Technical Analysis

The US dollar has pulled back just a bit against the Japanese yen during the trading session on Wednesday, as the market had gotten a bit too far ahead of itself. At this point, the market is likely to see the ¥146 level underneath as potential support, as it has been previous resistance. The market recently broke out of a consolidation area, and it has made a fresh, new high. Because of this, I think it is probably only a matter of time before we continue going higher, and that does make sense considering the fundamental situation currently driving the market.

For example, the Bank of Japan continues to keep interest rates low, thereby driving down yields. In other words, if you choose to short this pair, you have to pay a fee at the end of the day. On the other hand, if you choose to own the US dollar against the Japanese yen, you make money via swap.

As long as that’s going to continue to be the case, there’s no real reason to think that any selloff in this pair is worth hanging onto. On the other hand, a pullback should be thought of as a buying opportunity and I think that the US dollar will eventually reach the ¥150 level given enough time. In fact, we may very well blow through there, but right now that is my initial target. Underneath, I see the ¥144 level as the “floor in the market,”, and therefore if we were to break down below there then I think a deeper correction could come. It’s probably worth noting that a deeper correction will happen from time to time, but if you are patient enough, you should get a shot at picking up “cheap US dollars.”

Until the Bank of Japan changes its overall monetary policy, or if the Federal Reserve suddenly starts cutting rates, I think this is a market that eventually goes higher regardless. I just don’t see an argument for trying to short this market anytime soon. This goes for all yen related pairs, but the US dollar is especially attractive in times of uncertainty.

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