USD/JPY Price Forecast – US Dollar Testing Trendline Against Yen

The US dollar has rallied a bit during the trading session on Monday to kick off the week, bouncing from a major trend line. There is also the 200 day EMA underneath so the technical bounce should probably be somewhat expected. That being said, if we can break above the top of the candlestick from Friday, that would be an extraordinarily bullish sign but until then I would be a bit hesitant to go long quite yet. Quite frankly, the market still has a lot to digest when it comes to risk appetite so this may not be the best pair to be trading. That being said though, the technical signal is that we should bounce from here. However, the confidence just isn’t there. The upside is somewhat limited anyway, with the ¥110 level above being major resistance.

USD/JPY Video 04.02.20

If the market does break below the 200 day EMA and close below ¥108 on a daily chart, I believe that opens up the door to the ¥105 level longer-term, as we have been bouncing around between ¥105 and ¥115 on much longer-term charts. This makes the ¥110 level “fair value”, which is something that I refer to a lot when it comes these trading ranges. That being said, we are certainly in a major fight when it comes to risk appetite and market sentiment, so this is a pair worth watching, even if you are trading it. Quite frankly, if this market breaks down you probably are going to get more mileage out of shorting something like AUD/JPY or even NZD/JPY.

Please let us know what you think in the comments below