USD/JPY Forecast – The US dollar continues to test support

US Dollar vs Japanese Yen Technical Analysis

The US dollar initially rose in the early hours of Tuesday, only to turn around and fall again. The ¥142 level below is a major support level and I think at this point, it’s worth noting that we also have the intersection of an uptrend line that many people are paying attention to. I think right now we’re in the middle of trying to form a kind of double bottom. At this point, the double bottom is of course a sign that maybe things are starting to turn around. We recognize, of course, that the Federal Reserve will likely cut rates later this month.

But the question is how much is cut? If they only cut this month and maybe another time, the interest rate differential between the US dollar and the Japanese yen remains almost intact. Yes, it’s smaller, but it’s enough to attract a certain amount of entries. If we can turn around and break the ¥145 pair above, it can reach the ¥149 level.

Also, we have to keep in mind that both CPI and PPI will be out later this week, so it will have a little influence. And beyond that, we also need to keep an appetite for risk in the back of our minds. If we were to close below the ¥141 level daily, then I think the bottom is coming out and we’re probably going to go down quite significantly.

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This article was originally posted on FX Empire

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