USD/JPY Forecast – US Dollar Continues to Punish Japanese Yen
US Dollar vs Japanese Yen Technical Analysis
The US dollar initially pulled back just a bit during the early hours on Friday, but it looks like the interest rate differential continues to be a major driver of where we go next. Quite frankly, I have been short of the Japanese yen against multiple currencies for some time and although it’s been a boring trade, it’s been a very predictable and profitable one.
After all, you get paid at the end of every day to hold this position, and institutional traders do pay close attention to that. So with that being said, I think the market is going to continue to see every dip as value. I’d be particularly interested just underneath the 158 yen level. I think that’s an area that will continue to attract a lot of attention. But if we don’t get there, now we have to start to pay close attention to the 160 yen level because that’s where the Bank of Japan intervened.
Whether or not they do it again remains to be seen. They did jawbone a little bit the other day, but we can see what’s come of this. You get stopped out. You turn around, you start buying the pair again, you make your money again, you make it back, you end up making even more. That’s pretty much the market that we’re in at the moment. 160, I do think, is going to be a little bit of a barrier, but like I said, once it’s all said and done, it’s very likely that you have a situation where it just gets blown past like everything else has. The Japanese simply cannot raise rates or tighten monetary policy very much and as a result they’re on the defensive.
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This article was originally posted on FX Empire