USD/JPY Weekly Price Forecast – US Dollar Continues to Wilt

The US dollar has initially tried to rally during the week against the Japanese yen but found the ¥104 level to be a bit too much to get past. At this point, the market is likely to continue to see a “sell on the rallies” type of attitude, and I do think that we are probably going to go looking towards the ¥102 level, as well as the bottom of that massive candlestick from 2019. Whether or not we can continue to go lower from here is a completely different question but at this point in time it certainly looks as if we will try.

To the upside, if we did break above the ¥104 level, then I would look to short this market at the ¥105 level. Keep in mind that stimulus continues to be a major driver of the US dollar in general, and therefore I think we will continue to focus on shorting the dollar. The US Dollar Index breaking below the 88 handle could send the dollar plummeting, and it certainly would be seen over here. Furthermore, you can see a run towards safety and therefore the Japanese yen.

In other words, unless the Bank of Japan itself gets involved, I do not really see the catalyst for this market to go higher from here. That being said, it should also be noted that we have been very choppy and have been in more or less a “controlled descent” when it comes to this market. The entire year has been negative for the most part in 2020, but it has not exactly ran away in one direction or the other.