USD/JPY Weekly Forecast – US Dollar Giving Up Gains Again

USD/JPY Forecast Video for 02.01.23

US Dollar vs Japanese Yen Weekly Technical Analysis

The US dollar initially tried to rally during the week against the Japanese yen, but gave back the gains to show signs of weakness. At this point, if we can break down below the bottom of the candlestick from the previous week, I think this market could really start to wind down. That being said, this is an oversold condition so don’t be overly surprised we get a little bit of a bounce.

We have the jobs number on Friday of next week, so this of course will come into the picture as well so you have to keep in mind that the last day of the week might be a bit noisier than the other ones. Volume is an issue, and liquidity always causes lackluster trading, or sudden spurts in one direction or the other that are unexpected.

If we can break above the top the candlestick for this past week, that would be a bullish sign and could send the USD/JPY pair to the ¥138 level. Breaking above the ¥138 level would be a very bullish sign, and would continue the overall bull case. This point in time, keep in mind that the 10 year yield in Japan is capped at the 50 bps level, so if we break through there the Japanese yen is going to strengthen quite drastically. In the meantime, the Bank of Japan continues to print yen, so we will have to wait and see how much that comes into the market and pushes things around. The first couple days of next week should probably be somewhat lackluster, so would not read too much into them.

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