USD/JPY Forecast: Continues to See Support

The upcoming Federal Reserve and Bank of Japan meetings could significantly impact the pair’s movement. 

• The USD/JPY continues to exhibit significant sideways volatility against the Japanese yen, suggesting the formation of a bullish flag.
• This comes on the heels of a breakout from a major ascending triangle a few weeks ago, indicating that the market is attempting to establish a solid footing.
• With the Federal Reserve meeting scheduled for Wednesday and the Bank of Japan’s meeting on Friday, the currency pair could see significant movement. However, the Bank of Japan has already indicated that it is unlikely to make any significant policy changes.

A potential rate hike by the Federal Reserve could surprise the market, propelling the dollar-yen pair higher. Given the Bank of Japan’s apparent reluctance to alter its monetary policy soon, the interest rate differential alone could attract investors seeking to capitalize on this situation.

On the downside, the ¥138 level appears to be a significant support, with the 50-Day Exponential Moving Average converging towards it, providing additional support. A break below this level could raise concerns about the uptrend. However, this does not necessarily imply an immediate upward movement. Instead, it suggests that numerous buyers are ready to capitalize on “cheap US dollars.” This continues to be the way forward, as we see a potential bullish flag showing signs of momentum building. With both central banks meeting this week – this could be the week that we finally get momentum released.

• On the upside, the ¥141 level is a significant barrier that many traders will be monitoring closely, given its previous role as a resistance level.
• A break above this level could trigger the next upward leg, potentially propelling the pair to the ¥148 level.
• This projection is based on the potentially bullish flag and the ascending triangle that previously played a significant role in this market.

At the end of the day, the US dollar-Japanese yen pair is currently experiencing substantial volatility, with indications of a bullish flag formation. The upcoming Federal Reserve and Bank of Japan meetings could significantly impact the pair’s movement. The interest rate differential between the two countries could attract investors, while the ¥138 and ¥141 levels represent significant support and resistance levels, respectively. A break above ¥141 could trigger a significant upward movement, potentially reaching the ¥148 level. However, investors should remain vigilant due to the pair’s current volatility.

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