USD/JPY Forecast – US Dollar Launches to Kick Off the Week

USD/JPY Forecast Video for 07.02.23

US Dollar vs Japanese Yen Technical Analysis

The US dollar has gapped higher against the Japanese yen on Monday to kick the week. The Japanese Yen of course has to worry about interest rates rising, because the Bank of Japan is trying to fight rates from going above 50 basis points in the 10 year JGB. To do so, they will have to print Japanese yen, therefore driving down the value of it. Nonetheless, interest rates will continue to be crucial to pay attention to, as the market will have to be in sync with what’s going on there.

If we break out above the ¥133 level, then the market is likely to go looking to the 200-Day EMA, near the ¥134 level. After that, we now have the €135 level coming into the picture as well. Ultimately, breaking above that will bring even more money into the market. I believe that we may have just bottomed, but that doesn’t necessarily mean that it will be an easy move to do. The double bottom near the ¥127.50 level should continue to be crucial, but if we were to break down below it, then as very likely that we would see a huge move lower, because there’s a massive air pocket underneath.

All things being equal, I think this is a situation where it will probably be very choppy, but that’s not necessarily out of sorts for this pair, but if we continue to see rates rise around the world, it’s likely that the Japanese yen will continue to be very soft. It certainly looks as if we are going to go that way, even if it is only for a while.

For a look at all of today’s economic events, check out our economic calendar.

This article was originally posted on FX Empire