USD/JPY Forecast: Dollar Presses Historic Resistance as Breakout Threatens Above 161.00

• The Forex markets will be paying close attention to this pair, as we are looking for a potential break of a major swing high dating back to 1990.

• The US dollar has been noisy against the Japanese yen during the trading session on Thursday, as we continue to see the dollar reaching an area where the Bank of Japan has intervened.

After all, just about a month ago, we had seen a lot of selling pressure as the Bank of Japan defended the yen, but at this point in time, the interest rate differential remains very high, and because of this, you have to be very concerned about the overall area.

Top Regulated Brokers

1

Get Started 74% of retail CFD accounts lose money Read Review

If we can break above the 161-yen level, we will be clear of that, and then I think at that point in time, the only thing that really drives this pair back down would be some type of massive change with the Federal Reserve or the Bank of Japan again. That being said, any intervention by the Bank of Japan will be a short-term move and, quite frankly, offers a buying opportunity in the USD/JPY currency pair. We've just seen that, and that's typically how that works.

Deteriorating Inflation and Long-Term Outlook

With the Japanese seeing deteriorating inflation recently and the inflation numbers in the United States remaining fairly reasonably strong, that means that we probably continue to go to the upside. Furthermore, a lot of people are looking for US dollars at the moment, so when we break the 161 yen level, then we have cleared the 1990 swing high completely, and at that point, we could see the market looking to get to the 224 yen level over the next several years, at least that's what the technical analysis says.

The swap that you get paid at the end of every day will help build your account as well, and this is one of those situations where, if we do take off from here, this could be an investment, not just a trade. Short-term pullbacks continue to be buying opportunities with the 50-day EMA offering a floor.

Want to trade our USD/JPY forex analysis and predictions? Here's a list of forex brokers in Japan to check out.