USD/JPY Forecast: Tests 200-Day EMA

• In the early hours of Monday, we had seen the USD/JPY pair climb significantly, but he continues to struggle with the 200 Day EMA.
• At this point in time, we are in the process of trying to determine whether or not the trend is going to remain viable to the upside, or if something much more drastic is about to happen.
• Ultimately, this is a market that I believe continues to be very noisy, as there are multiple things coming at it in one shot.

External Noise

Top Forex Brokers

1

Get Started 74% of retail CFD accounts lose money Read Review

Don’t forget that this USD/JPY pair is highly sensitive to the bond market, and in particular, the 10 year yield differential between the United States and Japan. That market is highly influenced by talk of tariffs coming out the United States, and of course whether or not there is risk appetite. If there is more of a “risk off” type of scenario, a lot of money that gets sent around the world from Japan comes home, driving up the value of the Japanese yen. On the other hand, the Japanese are well known for their foreign investments, so if there’s more of a “risk on” type of scenario, the Japanese yen tends to get sold off.

Adding further noise to this is the fact that the Bank of Japan is suddenly worried about inflation, something that it has not had that much experience within the last 25 years or so. This has traders all over the place when trading the Japanese yen, and therefore it’s probably worth noting that we are on the precipice of some type of resolution that would have a major influence. Ultimately, the technical analysis is what we probably have to watch.

At this point in time, the ¥150 level underneath is a large, round, psychologically significant figure, and an area that should offer significant support. At the same time, the market breaking above the 200 Day EMA could kick off a move to the ¥155 level. At this juncture, it looks like we are in the midst of consolidating and building up pressure to make one of those 2 moves.

Want to trade our USD/JPY forex analysis and predictions? Here's a list of forex brokers in Japan to check out.