USD/JPY Forecast – US Dollar Continues to See Support Against The Yen

US Dollar vs Japanese Yen Technical Analysis

The US dollar has rallied rather significantly in the early hours on Monday against the Japanese yen as we are now threatening the 158 yen level again. Quite frankly, this is a part of the market that you have no interest in shorting. At least you shouldn’t because although we may get the occasional pullback, anybody who has been buying Japanese yen has been absolutely pummeled by the momentum of this market.

That includes the Bank of Japan. Sometimes a market is so in one direction that you simply cannot fight it. The momentum in this market is rather brutal, and I think it will continue to favor the US dollar quite drastically over the Japanese yen for the foreseeable future. In fact, people now at least a large segment of people believe that the Federal Reserve may not cut rates at all this year. And if that’s going to be the case, you continue to get paid to hang on to this pair and therefore it makes no sense shorting it.

If and when we can break above the 158 yen level, and quite frankly I don’t see how we don’t, then we have a potential move to the 160 yen level which seemed to have been where the Bank of Japan intervened several weeks ago. So that should be a big fight, but anything above there has this market making its next leg higher.

And I do think that eventually happens. Between now and then, short-term pullbacks continue to offer buying opportunities, with the 50-day EMA and the 155-yen level both underneath, offering potential support for a market that looks extraordinarily positive. I also believe that just about anything against the yen should do fairly well, so it’s not just the US dollar.

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