USD/JPY Forecast – US Dollar Recaptures 130 Level Against Yen

USD/JPY Forecast Video for 24.01.23

US Dollar vs Japanese Yen Technical Analysis

The US dollar has rallied again against the Japanese yen during trading on Monday, breaking back above the ¥130 level. This is an area that of course has a certain amount of psychology attached to it, but it’s probably worth noting that the ¥127.50 level offered a significant amount of support previously, and now it looks like we are trying to take out the top of the inverted hammer that formed after the Bank of Japan said that it was sticking with its bond buyback program, essentially making it the only central bank out of all of the majors that are doing quantitative easing.

By purchasing “unlimited bonds”, the Japanese are printing unlimited currency. This means that the value the Japanese yen will eventually start falling again, driving this back into an uptrend. However, if interest rates continue to fall around the world, that may prove to be enough of a reprieve for the Bank of Japan, and therefore they may get away with loosening monetary policy and not seeing their currency destroyed. That was the name of the game last year, so this year it’s probably going to be more of the same.

If we take out the top of that inverted hammer from last week, that would be an extraordinarily bullish sign, and more likely than not have people flooding into this market in order to pick up cheap dollars. On the other hand, if we turn around and break back down, it’s possible that we get a situation where the market has to test the ¥127.50 level again for support. Either way, volatility is going to be a mainstay.

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