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USD/JPY Weekly Price Forecast – US dollar explodes to upside for the week

Christopher Lewis
Updated
The US dollar has rallied significantly during the trading week, breaking above the ¥111 level, an area that has been very important over the last couple of months.

It appears that inverting bond yields in Japan are starting to have an effect on the Japanese and overall. Because of the inverted yield curve, it’s very unlikely that the Bank of Japan will be willing or even able to tighten monetary policy anytime soon. Because of this, it’s very likely that we will continue to see an upward proclivity in this market. That’s not to say that there is a significant amount of resistance above, there most certainly is. I think that we will probably see a bit of a short-term pullback, and then eventually reached towards the ¥115 level above.

Overall, the fundamental situation is favorable for the US dollar, and although the Japanese yen is considered to be a bit of a safety currency, I think that only go so far in the current trading environment as people worry about tariffs and the like. I believe that the ¥115 level above is a massive level to pay attention to, and therefore a break above that level could open the door to much higher pricing. At that point, it becomes more of a “buy-and-hold” longer-term trend. Either way, I look at pullbacks as value just waiting to be taken advantage of, and that’s exactly what I plan on doing. Alternately, if we were to break down below the ¥110 level, then I think the market would probably break down rather significantly, possibly even as low as the ¥105 level. I currently put that at about a 10% probability though, so although I am aware of this possibility, it’s not something I’m expecting.

USD/JPY Video 16.07.18

This article was originally posted on FX Empire

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