USD/JPY Weekly Price Forecast – US Dollar Continues Its March Higher

Published: Oct 14, 2022, 13:47 UTC•2min read

The US dollar has rallied again during the course of the week against the Japanese yen as Bank of Japan officials have reiterated their plans to keep interest rates down.

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USD/JPY

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US Dollar vs Japanese Yen Weekly Technical Analysis

The US dollar has powered higher against the Japanese yen yet again during the week, as we are now starting to threaten the ¥148 level. The market has seen members of the Bank of Japan reiterate their desire to keep interest rates down, so after using 15% of the banks FX reserves, it appears that they have acknowledged the fact that they can only do so much to slow down the rate of ascent.

With this in mind, the US dollar will continue to be like a wrecking ball against the Japanese yen and everything else it touches. Ultimately, I think this is a situation where we will get the occasional pullback, but there will be so many people waiting for that pullback, that pullbacks may be somewhat shallow. I do think that we eventually get to the ¥150 level, and it may happen quicker than a lot of people thought.

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A currency losing 30% of its value in a year is something that you normally don’t see any major economy, but quite frankly I don’t think there’s much the Japanese can do. They either need to accept higher interest rates, or watch the Japanese yen turn into toilet paper. The biggest problem that they have is that Japan has an insane amount of debt, so those interest rates rise, they will certainly have to come up with some type of magic trick.

Because of this, I have no interest in shorting this pair still, despite the fact that on almost any metric it is overbought. Look at pullbacks as a potential value play, and what is a longer-term running uptrend.