USD/JPY Forecast – US Dollar Testing a Major Support Level

USD/JPY Forecast Video for 02-01-2024

US Dollar vs Japanese Yen Technical Analysis

Taking a look at the dollar yen you can see the market continues to see a lot of noisy behavior with the uptrend line just underneath current pricing causing a bit of support the 141 yen level and the 142 yen level have kind of formed a bit of a support that the market is testing at the moment. Keep in mind that the US dollar is going to be highly influenced by the 10 year yield in the US bond markets. They have a huge influence on this pair. If yields start to rally again, that does lift the US dollar against the yen.

At this point though, I think you are more likely than not to see some consolidation between the uptrend line and the 200 day EMA. The 200 day EMA of course is an indicator that a lot of people follow, so that in and of itself causes noise. Breaking above there opens up the possibility of a move to the 145 yen level, but I’m not necessarily holding my breath for that happening easily.

As we roll into January, the first week will be a bit noisy. Traders out there will be trying to put positions on for longer term trades, but we also don’t have the jobs number until the second week.

Keep that in mind, but there are some inflation numbers between now and then that could move markets coming out of the USA. The Bank of Japan continues its very loose monetary policy, so that weakens the Japanese yen overall, except perhaps against the US dollar, as the Federal Reserve has already started to move dots on the so-called dot plot, suggesting that there are rate cuts coming.

Either way, we are at a major point of inflection, so we’ll have to see what happens after what I suspect will be consolidation. Eventually we will take off, but in the short term we will probably have to build up enough momentum to finally make whatever move we are getting ready to do.

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