USD/JPY Price Forecast – US dollar rallies against yen after Bank of Japan meeting

The US dollar has rallied significantly during trading on Tuesday, breaking above the ¥111.50 level after the Bank of Japan meeting. The Japanese yen has taken it on the chin through the day though, and at this point it looks like we could continue to go a bit higher. · FX Empire

Christopher Lewis

Updated Tue, Jul 31, 2018, 10:42 PM

First and foremost, I believe in buying dips in this pair. I think that the ¥111 level is the beginning of significant support, and the break out that we have seen during the day on Tuesday is indicative of a market that is trying to find a bit of a bottom. The market looks likely to go looking towards the ¥112.25 level, followed by the ¥113 level after that. I believe that short-term pullbacks should continue to offer value that most people will be willing to take advantage of.

Keep in mind that the jobs number comes on Friday, and as that being the case, it’s likely that the market should continue to keep its eye on the US economy overall. The differential between central banks continues to widen, as the Federal Reserve is certainly going to raise interest rates, while the Japanese art anywhere near tightening monetary policy of any significance. Barring some type of very negative headline, I believe that this pair should continue to grind higher. Obviously though, the Japanese yen is often used as a safety currency in times of political or geopolitical turmoil, which we certainly have plenty of these days. I believe that this market will continue to be noisy but offer plenty of opportunities if you will simply wait for them. Think of this as shopping: the US dollar could go on sale occasionally, and you want to be a buyer under those circumstances.