USD/JPY Forecast – US Dollar Pulls Back Against Yen

US Dollar vs Japanese Yen Technical Analysis

Taking a look at the dollar on Monday, you can see that we have drifted a little bit lower against the Japanese yen, but it does look like we are starting to stabilize a bit. Ultimately, this is a market that I think will continue to see a lot of noisy behavior. And of course, we have this situation where people are taking a look at this pair through the prism of perhaps the Federal Reserve cutting rates later this year. And with that being the case, I think you have a scenario where we are more likely than not going to see the 147.33 level above offer a bit of resistance. If we can break above there, then the market is likely to go looking to the 149.80 level.

Underneath you have the 200 day EMA, and that of course is an area where a lot of people will be paying close attention as it sits just above the 145 level. The US dollar continues to pay swap at the end of every session, so I do think that eventually the longer term traders come back into this market and take advantage of that. But right now, it looks like we have to work off some of the excess froth that we had previously.

We are roughly at a spot where we had seen support before, so I think it does make a certain amount of sense that the market participants will continue to be very interested in this area, and a lot of this will come down to whether or not we can pick up any momentum. While the US is likely to cut rates later this year, the reality is that the Bank of Japan is nowhere near doing so, and with that, I think you have to look at this through the prism of the longer term outlook for both currencies, although both would probably have loose monetary policy eventually, we are light years away from seeing that in the United States. So with this, I’m looking for an opportunity to get long in this market, but right now don’t quite see it.

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