USD/JPY Weekly Forecast – US Dollar Continues to Recover

US Dollar vs Japanese Yen Weekly Technical Analysis

The U.S. dollar has bounced significantly from a major uptrend line and perhaps even more importantly, the 140 yen level. The market is likely to continue to see a lot of questions asked in this area due to the fact that it’s an area that’s been important multiple times and this past week we’ve now had the Federal Reserve cut 50 basis points while the Bank of Japan sat still.

It is kind of interesting really when you think about it due to the fact that people were panicking that the Japanese were suddenly going to become very hawkish. They aren’t because they can’t, the reason being of course that the Japanese economy is a bug looking for a windshield and that windshield has higher interest rates.

So given enough time, they have to keep these rates low and it’s very likely that the Japanese will never be able to raise above 25 basis points like they are now. If they did, then debt would explode, it would pretty much wipe out the Japanese economy. There is a level where everything implodes in Japan and takes most of the financial world down with it. Because of this, I think we’ve got the beginning of a turnaround and an uptrend, and I have no interest whatsoever in shorting this market, at least not until we close below the 140 yen level, something that we clearly aren’t doing at the end of this week.

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