USD/JPY Weekly Price Forecast – US Dollar Has a Wild Ride Against the Yen for the Week

US Dollar vs Japanese Yen Weekly Technical Analysis

The U.S. Dollar has plunged during the week to reach below the 142 yen level, only to turn around and bounce significantly. At this point, it looks like we are going to try to close out the week with a hammer, which of course is a bullish sign. The question now is whether or not we are going to continue going higher or if this is just a simple balance on the way to much lower levels. I think at this point, we are in the process of forming a bit of a two-speed market. Quite frankly, the Japanese yen is more likely than not going to be eviscerated over the longer term. The question is, of course, how long is that long term?

In the short term, we probably see traders continue to react to the idea of the Federal Reserve cutting rates and Japan at the same time raising rates and perhaps, more importantly, tightening due to not buying bonds. But the reality is the Bank of Japan cannot keep tight monetary policy forever. So, I think given enough time, this is a market that does bounce.

If we can break above the 148.50 yen level, then I think we will continue to climb. However, if we were to break down below the bottom of this candlestick, we are more likely than not to have much further to go to the downside. The yen has been very noisy over the last month or so, but when you look at the chart, it’s not a whole lot different than every other major sharp pullback we’ve seen in the past.

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