USD/JPY Forecast – US Dollar Recovers Against The Japanese Yen to Start Off The New Year

USD/JPY Forecast Video for 03-01-2024

US Dollar vs Japanese Yen Technical Analysis

The US dollar rallied significantly during the course of the trading session on Tuesday and broke above the 142 yen level, showing signs of life. If we can break above the 142.80 yen level, or right around there, I think we will have cleared quite a bit of resistance, opening up the possibility of a move to the 200-day EMA. Keep in mind that the market is likely to continue to see a lot of noisy behavior, especially as the market is one that will be focusing on the possible Bank of Japan change in monetary policy.

The idea that the Federal Reserve is going to cut three times next year, at least according to the dot plot, which consequently should be noted that they do everything they can to tell you that it is not gospel. So that being said, the market does tend to run with those dot plot figures. All things being equal, we are close to a major support level with the uptrend line the 141 yen level and I think that ultimately a bounce does make a certain amount of sense here. Because of this, I think that we will continue to see a lot of volatility that will make trading the market a little bit challenging at times.

I do see not only the 200 day EMA, but the 145 yen level being resistance if we can break above there, then it could be a good sign, but ultimately, I do think it would take a certain amount of change in attitude to make that happen. The Friday jobs number could be the catalyst because this pair does tend to be very sensitive to that but ultimately, we are in an area where there is a certain amount of value, and a bit of a bounce does make sense, at least for the short term. Ultimately, this is a situation where the US dollar is trying to sort itself out at extremely oversold conditions.

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