USD/JPY Price Forecast – US Dollar Trying to Stabilize

The US dollar has rallied slightly against the Japanese yen during the trading session on Thursday, bouncing a bit from the massive selloff that we had seen on Wednesday. That being said, the actual shape of the market itself has been a descending triangle, and that suggests that the market is eventually going to break down much further. This will be especially true if we get massive stimulus, because it should work against the value of the greenback eventually.

USD/JPY Video 23.10.20

At this point, if we can break down below the ¥104 level, the market is likely to go looking towards the ¥102 level. That being said, it is not necessarily going to happen overnight. However, breaking below the ¥104 level will open up a bit of a “trapdoor effect” as the bottom would be falling out. Nonetheless, I think there are a multitude of reasons to think that we may get a short-term bounce, but I do believe that the ¥105 level will offer pretty significant resistance, and obviously the 50 day EMA will be even more so as it has been so reliable for the last several months.

I do not have a scenario in which I am buying this pair, because we either get the US dollar selling off due to stimulus, or we get this pair selling off due to a “risk off scenario” which almost always favors the Japanese yen anyway. Ultimately, I still like the idea of fading rallies in this pair for the bigger move.

For a look at all of today’s economic events, check out our economic calendar.