USD/JPY Price Forecast – US Dollar Continues to Plow Higher

The US dollar has rallied significantly during the course of the trading session on Monday to break above the ¥109 level, a level that has been resistance multiple times over the last week or so. That being said, the market has gotten way ahead of itself, so I do think that a pullback is coming, and quite frankly it is very difficult to buy this market as it is so overextended. However, if you were to get long here you could just simply slide a stop loss under the most recent consolidation around the ¥108.25 level, but I still prefer some type of significant pullback to offer value. It is possible that we get that Wednesday after the FOMC meeting, depending on what is said.

USD/JPY Video 16.03.21

The reality is that we are looking at is an expression of the interest rate differential between US and Japanese bonds, as the US interest rates have spiked recently. At this point time, the market is likely to see this currency pair move directly in lockstep with the 10 year yields in America. JGB yields continue to be very weak, and as a result it is hard to imagine a scenario where there is a sudden rush towards the Japanese yen for anything other than a pullback that you can take advantage of.

For what it is worth, we have recently seen the “golden cross”, when the 50 day EMA breaks above the 200 day EMA. This is a signal that a lot of longer-term traders will pay close attention to, so it is worth keeping in the back of your mind.

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