USD/JPY Forecast Video for 08.06.23
US Dollar vs Japanese Yen Technical Analysis
The US dollar initially attempted to decline against the Japanese yen during Wednesday’s trading session but eventually reversed its course, displaying signs of renewed strength. As a result, the market exhibited a prevailing “buy on the dip” mentality, propelling it towards the ¥141 level, which had served as a point of retreat a few weeks ago. A breakthrough above this level would create the potential for a more significant upward movement. Consequently, I anticipate that such a breakthrough will occur, reaffirming the recent pullback as a test of the upper boundary of the long-standing ascending triangle, a crucial formation in this market. With a longer-term perspective, I maintain a bullish outlook on this currency pair.
This sentiment will be particularly reinforced if the Federal Reserve decides to raise interest rates again or adopts a generally hawkish stance next week. Such actions could drive the market even higher. In the event of a successful breach above the ¥141 level, I believe the market will transform into a “buy-and-hold” scenario. Subsequently, our target would shift towards the ¥148 level, which represents the measured move of the ascending triangle formation.
Conversely, should the market experience a breakdown below the ¥130 level, a test of the 50-Day EMA becomes a possibility. The 50-Day EMA is a widely monitored technical indicator that could provide a level of support. However, descending below this threshold would undoubtedly carry a negative connotation. Nevertheless, I find it highly unlikely that such a scenario would unfold unless the Federal Reserve’s interest rate statement or future outlook yields unexpected surprises. In such an event, anything could transpire. Nonetheless, at present, it appears that we are more likely to witness a period of choppy behavior rather than any significant developments.
Ultimately, the US dollar initially encountered resistance against the Japanese yen on Wednesday but subsequently rebounded, showcasing renewed strength. This “buy on the dip” sentiment prevailed, propelling the market towards the ¥141 level, previously identified as a significant retreat point. A successful breakthrough above this level would lay the groundwork for further upward momentum, validating the recent pullback as a test of the ascending triangle formation’s upper boundary, which has long held prominence in this market. Considering the potential for the Federal Reserve to raise interest rates or adopt a hawkish stance in the coming week, the market could experience even greater upward movement.
For a look at all of today’s economic events, check out our economic calendar.
This article was originally posted on FX Empire