Start Trading Now Get Started
Affiliate Disclosure
Affiliate Disclosure DailyForex.com adheres to strict guidelines to preserve editorial integrity to help you make decisions with confidence. Some of the reviews and content we feature on this site are supported by affiliate partnerships from which this website may receive money. This may impact how, where and which companies / services we review and write about. Our team of experts work to continually re-evaluate the reviews and information we provide on all the top Forex / CFD brokerages featured here. Our research focuses heavily on the broker’s custody of client deposits and the breadth of its client offering. Safety is evaluated by quality and length of the broker's track record, plus the scope of regulatory standing. Major factors in determining the quality of a broker’s offer include the cost of trading, the range of instruments available to trade, and general ease of use regarding execution and market information.

USD/JPY Forecast: Plummets After CPI Misses

By Christopher Lewis
Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.

As long as it’s going to be the case, then it’s very likely that what we have is a situation where the market will be correcting itself sooner rather than later.

  • The USD/JPY has fallen rather hard during trading on Thursday to reach down to the ¥142 level after the CPI figures coming out of the United States were 0.4% month over a month instead of the 0.6% expected.
  • After that, you should also keep an eye on the fact that the year-over-year inflation is still 7.7%.
  • This is much higher than the Federal Reserve is wanting it to be, so it’s very likely they will continue to see the need to keep it very tight.

As long as it’s going to be the case, then it’s very likely that what we have is a situation where the market will be correcting itself sooner rather than later. The fact that we pull back to the ¥142 level is not a huge surprise, considering the historical importance of this area. If we do break down below there, then the ¥140 level gets targeted as well. The size of the candlestick is rather impressive, but at the end of the day we are still in a huge uptrend.

Looking for Signs of Stabilization

I’m looking for signs of stabilization and then buying pressure that I can get involved in. Granted, this is a pair that probably needed to pull back because it had been so one-way for so long, but the Bank of Japan continues to flood the market with the Japanese yen as they are trying to keep interest rates down. Meanwhile, even if the Federal Reserve is going to slow down its rate of tightening, it is still going to be light years ahead of the Bank of Japan.

The ¥135 level underneath is essentially where the 200-Day EMA is currently sitting, and therefore I think that is the bottom of the overall trend. It looks at this point as if we are trying to test some type of trendline, but ultimately, I think the most important thing to pay attention to is going to be the bond market. As long as the bond market continues to see high-interest rates in America and the Japanese sitting right at 0.25% on the 10-year, it’s only a matter of time before this market turns around and goes to the upside. Ultimately, this is a market that desperately needed this pullback, and we will have to wait and see whether or not people are willing to be short the greenback heading into the weekend.

USD/JPY

Ready to trade our Forex technical analysis? Here are the best Forex brokers to choose from.

Christopher Lewis
About Christopher Lewis
Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.
 

Most Visited Forex Broker Reviews