USD/JPY Price Forecast – US dollar pulls back against yen on Thursday

The US dollar has initially tried to rally against the Japanese yen but pulled back as we approached the ¥111 level. By pulling back the way we have, it looks likely that we will continue to see a bit of choppiness. In fact, you can make an argument for a bit of a bearish flag on the hourly chart, but at the end of the day I’m not overly concerned about that, I think we will eventually see support at the ¥110 level anyway, which I look at as one of the major support levels that we are dealing with. Beyond that, the ¥109 level is more of a “floor” from what I see.

In general, I like the idea of range bound trading, but I think that longer-term traders are looking for this pair to rally due to the interest rate differential between the United States and Japan, which should only widen in the future. The Bank of Japan is light years away from being able to tighten monetary policy, while the Federal Reserve is known to be looking at raising rates at least twice, if not three times over the next year. If we can get good news involving the trade war front, that could send this pair higher as well. At this point though, we also need the Turkish situation to calm down, and then people will be more willing to take a bit of a “risk on” trade, which generally will propel this market higher as well. I’m looking to buy dips, but I need some type of supportive candle to put money to work.

USD/JPY Video 17.08.18