USD/JPY Weekly Forecast – US Dollar Finds Buyers After BOJ

USD/JPY Forecast Video for 31.07.23

US Dollar vs Japanese Yen Weekly Technical Analysis

The US dollar has plunged against the Japanese yen during overnight trading on early Friday morning to make this much more of an interesting week than people thought it would be. That being said, it looks like the ¥138 level will continue to offer significant amount of support, and therefore I think it’s probably only a matter of time before we pick up to the upside. The ¥138 level was the previous resistance area for a massive ascending triangle, it has been tested 3 weeks in a row. So far, it has held up quite nicely, and it does suggest that there are plenty of buyers underneath.

With the Bank of Japan expanding its band of rates, thereby allowing a little bit more flexibility when it comes the yield curve control, market had to re-price the Japanese yen for a moment. However, it’s probably worth noting that by the end of the initial reaction, the market really didn’t go anywhere, at least not as much as you would expect. With that being said, I think it shows that traders are still going to focus on the massive interest rate differential that we have in this pair, even if the Japanese do allow the market to price in a little bit more in the way of interest rates. You can still drive a bus through the interest rate differential between these 2 currencies, so I think at the end of the day you will get an opportunity to pick up “cheap US dollars”, but you may need to do it off of a shorter-term chart. Breaking above the ¥142.50 level opens up the possibility of ¥145, followed by the ¥150 level.

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