USD/JPY Forecast: USD Continues to Find Buyers On the Dip

A lot of short-term traders will be attracted to this market.

The US dollar continues to find buyers on dips against the Japanese yen, which makes sense considering that the Bank of Japan is going to continue loosening monetary policy. As long as they are willing to buy “unlimited bonds”, it makes quite a bit of sense that we would see the Japanese yen get hammered against almost everything else. Looking at this USD/JPY live chart, we have been in an uptrend for quite some time, and I don’t think that changes anytime soon.

Is it time to short the USD/JPY?

Underneath, the ¥140 level should be supported, especially as the 50-Day EMA is starting to come into the picture as well. It’s also an area that has been psychologically important in the past, and also beyond that, has seen a bit of a short-term resistance barrier. Ultimately, there’s no way to short this pair anytime soon, but if the Bank of Japan does have to acquiesce, whether or not they are there yet would be a completely different question. After all, the Federal Reserve is just now starting to actually run off its balance sheet, meaning that this could go much further.

Ultimately, I think you need to pay attention to the fundamentals when it comes to this currency pair, and with the Federal Reserve raising interest rates this week, it’ll come down to what Jerome Powell has to say in the statement, and of course the press conference. Ultimately, this is a market that I think will continue to see a lot of noisy behavior, but it still is a market that is looking to the upside. It’s not until the Bank of Japan changes its attitude, or perhaps more importantly - the Federal Reserve that you can start to think in the other direction.

Noteworthy:

  • In the next couple of days, it will more likely than not be a sideways and choppy market. Because of this, a lot of short-term traders will be attracted to this market, as it could be easy trading for those who pay attention to the timeframe such as the 15-minute chart.
  • As far as a longer-term move is concerned, we need to break above the ¥145 level on a daily close.
  • If we do see that, then it’s likely that the market could go much higher, perhaps reaching to the ¥147.50 level, and then maybe even the ¥150 level.

USD/JPY chart

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Christopher Lewis

Christopher Lewis has been trading Forex for several years. He writes about Forex for many online publications, including his own site, aptly named The Trader Guy.

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