USD/JPY Forecast – US Dollar Continues to Look Strong Against Yen
US Dollar vs Japanese Yen Technical Analysis
The U.S. Dollar has rallied a bit during the early hours on Tuesdays. It looks like we are going to continue to see more of this. The 160 yen level underneath seems to be pretty significant support, and that does make a lot of sense considering that there should be market memory there. The 160 yen level is where the Bank of Japan intervened and sent this market spiraling right back down to the 152 yen level.
That being said, we have blown through it, so now it should be a situation where traders continue to find a lot of interest in the market. So, I do think given enough time, we get looking to the 165 yen level, which is the next big figure, and then of course, 170 yen. I don’t necessarily think we get there easily or quickly. I just think it’s where we do end up. You can see that we had rallied quite significantly from the 155 yen level, and at this point have only had a handful of negative days.
I think this is a situation where we continue to see traders taking advantage of the interest rate differential, and I just don’t see where that changes. The Bank of Japan simply has far too much in the way of debt to deal with, to raise rates, and the Federal Reserve has to deal with inflation. There’s still a very strong argument to be made for the idea that the Federal Reserve is not going to cut rates at all this year. So, we’ll have to wait and see.
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This article was originally posted on FX Empire