USD/JPY Forecast – US Dollar Turns Around to Kick Off the Week

USD/JPY Forecast Video for 08.08.23

US Dollar vs Japanese Yen Technical Analysis

The US dollar has rallied a bit during the trading session on Monday, as we have turned around from the short-term pullback. At this point, it looks like the ¥142.50 level continues to be a bit of a magnet for price, and if we do turn around and break above the level, it’s likely that we will see the US dollar continue to go higher. All things being equal, this is exactly what I expect to see, with the ¥145 level above being a target. If we can break above there, then it opens up another leg higher.

Breaking down below the bottom of the candlestick for the day on Monday could open up a move down to the 50-Day EMA, then the market would start to focus on the idea of the ¥138 level as a major support level as it was the top of the previous ascending triangle, and of course we have the 200-Day EMA racing toward it. That of course is a major indicator that a lot of people pay attention to determine whether or not the trend is up or down, but at this point I think it’s very unlikely that the pair drops to that level.

Ultimately, I think this is a market that continues to see a lot of back-and-forth choppy behavior, and of course uncertainty in general. Ultimately, this is a situation where the interest rate differential does make a huge difference, so therefore if you are a buyer of the market, you can get paid at the end of the day quite handsomely due to the Bank of Japan and its ultra-loose monetary policy.

All things being equal, I think that continues to be the main story here and eventually the Japanese yen gets completely eviscerated. This of course could change if the Bank of Japan finally does something to tighten monetary policy, but at this point in time actions speak louder than words. Recently, the Japanese tried to jawbone the market down, but then went into the bond market the very next trading session, showing just how little conviction that the Japanese have.

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