USD/JPY Forecast Video for 18-01-2024
US Dollar vs Japanese Yen Technical Analysis
Looking at the dollar against the Japanese yen you can see that we have broken a little higher during the trading session again on Wednesday but getting a little extended though, just as I said yesterday, so I do think that a pullback is probably coming sooner rather than later. This pullback is more likely than not going to be a buying opportunity and I’m going to treat it as such.
The 50 day EMA underneath should offer support, maybe even 147.33, but I do think that if we pull back, we probably pull back a little deeper than that. The interest rate differential between the two currencies continues to favor the US dollar overall. So, I really don’t see an argument as to why you would want to short this pair.
And to the upside, the 149.80 level is an area of significant resistance as well. And that would be your next target. When you look at the longer term charts, we are still very much in an uptrend. And despite the fact that there was a wicked sell off at the end of last year, it’s obvious that the Bank of Japan is not going to do anything to keep the Japanese yen stable because they have to worry about interest rates.
The indebtedness of Japan is one of the biggest problems. You can either have a strong currency and high rates or a weak currency and low rates, but you cannot get both sides of the equation here and it looks as if the Bank of Japan is finally starting to admit this.
On the other side, you have the Federal Reserve, which looks like it could be cutting rates next year, but quite frankly, I think it’s going to be quite some time before we see the Federal Reserve get anywhere near the rates that Japan has. Because of this, I think you will continue to get paid by hanging on to this pair, and most certainly will due to the daily swap.
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This article was originally posted on FX Empire
