USD/JPY Price Forecast – US Dollar Continues to Show Strength

The US dollar initially pulled back during the trading session on Monday only to turn around and show signs of strength. At this point, the market looks as if it is going to try to reach the ¥107 level, an area that of course is a large, round, psychologically significant figure. At this point, I do think that the market is starting to change the overall trend, and that of course is a very noisy affair that people will be very skittish with. All things being equal, this has a lot to do with the idea of higher interest rates in the United States, and if we were to pull back from here, I think that the 200 day EMA will be a significant amount of support.

The ¥105 level underneath is a large, round, psychologically significant figure, and an area where we could see the 50 day EMA and push to the upside as well. At this point in time, I think that we are getting close to the idea of forming a bit of a “golden cross”, which of course is a longer-term “buy-and-hold” signal that some people will use. In general, this is a market that is going to continue to be very noisy and you will have to pay close attention to the 10 year yields in the United States, as they can drive more money into the US dollar as they arise. However, you should also pay attention to the 10 year JGB, because the yield differential between the two markets is one of the biggest drivers of what you see on this chart over the longer term.