USD/JPY Forecast – USD Continues to Pressure JPY in Big Uptrend

USD/JPY Forecast Video for 07-02-2024

US Dollar vs Japanese Yen Technical Analysis

The dollar initially fell against the Japanese yen. However, it has turned around on Tuesday to show signs of strength again. Whether or not we are ready to break out remains to be seen, but we certainly have plenty of momentum underneath us. This does make a certain amount of sense considering that although the Federal Reserve is likely to cut rates this year, the reality is we are light years away from that happening.

Because of this, I think the market is probably more of a buy on the dips type of scenario, with the 150 level being the potential target in the short term. Speaking of short term, if we do get a little bit of a pullback from here, I believe that the 50 day EMA, which currently resides in the 146.50 region, should offer plenty of support.

You could make an argument for a bullish flag that has been broken to the upside. So that’s another reason to think that this pair goes higher, but really, you just need to look at the Bank of Japan and their unwillingness to tighten monetary policy that in and of itself is going to keep the Japanese yen weak. So keep that in mind, this isn’t so much a dollar strength story as it is a Japanese yen weakness story.

Above we have the 152 yen level as a potential ceiling in the market at this point. Underneath that 50 day EMA that was mentioned earlier, we have the 200 day EMA offering support as well. I don’t think those come into play. Quite frankly, I think we are going higher, but keep in mind that there are plenty of buyers underneath from a systematic standpoint that could very well get involved in this market. This is an issue that many people forget – that there are a huge amount of systematic and algo traders out there that watch things like moving averages, and therefore I think the market has plenty of support – barring some kind of turn around by the Bank of Japan or the Federal Reserve.

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