We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
EUR/USD
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
GBP/USD
Mixed
USD/JPY
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Bullish
Oil - US Crude
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Bitcoin
Bearish
More View more
Real Time News
  • RT @EUCouncilPress: #Eurogroup is over! Watch the press conference with @mariofcenteno, @PaoloGentiloni and @ESM_Press Regling LIVE at +/…
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 96.87%, while traders in USD/CAD are at opposite extremes with 83.13%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/54YP4FM9nw
  • Commodities Update: As of 17:00, these are your best and worst performers based on the London trading schedule: Silver: 0.30% Oil - US Crude: 0.18% Gold: -0.14% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/TmyP5d1RBD
  • Here is the MSCI's World Equities ETF overlaid with the aggregate stimulus from the Fed, ECB, BOE and BOJ. That stimulus is level out despite a rise from 3 of those 4, largely due to rising US Dollar (the pricing currency here) https://t.co/GlxkPs4xZN
  • Forex Update: As of 17:00, these are your best and worst performers based on the London trading schedule: 🇨🇦CAD: 0.16% 🇨🇭CHF: 0.11% 🇳🇿NZD: 0.10% 🇪🇺EUR: 0.07% 🇯🇵JPY: -0.12% 🇬🇧GBP: -0.27% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/COoUBRv8Z5
  • Indices Update: As of 17:00, these are your best and worst performers based on the London trading schedule: US 500: 0.28% Wall Street: 0.27% Germany 30: 0.01% France 40: -0.07% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/fbpBesDErN
  • Contrary to standard belief, greed and profits are often inversely correlated in trading. Remaining disciplined is key to a successful trading strategy. Learn how to control greed when trading here: https://t.co/RvxpJotFf9 https://t.co/87FHc0QKOo
  • At the Eurogroup's meeting today, the coronavirus was mentioned as a temporary curb to growth
  • Forex Update: As of 15:00, these are your best and worst performers based on the London trading schedule: 🇨🇦CAD: 0.15% 🇨🇭CHF: 0.03% 🇦🇺AUD: 0.02% 🇳🇿NZD: -0.01% 🇯🇵JPY: -0.11% 🇬🇧GBP: -0.31% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/P0mJKN0ehv
  • Indices Update: As of 15:00, these are your best and worst performers based on the London trading schedule: Germany 30: 0.28% Wall Street: 0.24% US 500: 0.22% France 40: 0.19% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/sjYJLGdIbL
USDJPY: US Dollar Japanese Yen Exchange Rate Forecast

USDJPY: US Dollar Japanese Yen Exchange Rate Forecast

2011-12-07 06:33:00
Jamie Saettele, CMT, David Rodriguez, Ilya Spivak,
Share:

US Dollar / Japanese Yen Technical Forecast

Monthly Chart

USDJPY_US_Dollar_Japanese_Yen_Exchange_Rate_Forecast_body_usdjpy.png, USDJPY: US Dollar Japanese Yen Exchange Rate Forecast

Prepared by Jamie Saettele, CMT

There are signs that the long term USDJPY trend is reversing (from down to up). Those signs include bullish RSI divergence at the October low and a positive slope on the 13 week average. A push through the trendline that has defined the trend since the May 2010 high is required in order to inspire confidence in the upside. Objectives span the 8050-8300 range. Near term support is defined by trendlines from the October and November lows.

US Dollar / Japanese Yen Interest Rate Forecast

Currency, Central Bank

US Dollar, US Federal Reserve

Japanese Yen, Bank of Japan

Net USDJPY Spread

Signal

1-Year Expectations(Basis Points)

5

3

2

Bullish

Yield in 1 Year(Percent)

0.30

0.33

(0.03)

Bearish

USDJPY_US_Dollar_Japanese_Yen_Exchange_Rate_Forecast_body_Picture_6.png, USDJPY: US Dollar Japanese Yen Exchange Rate Forecast

US Dollar / Japanese Yen Interest Rate Trading Bias: Bullish

Negligible central bank interest rate differentials and forecasts leave little clear bias for the US Dollar/Japanese Yen. The pair remains in a fairly obvious downtrend dating back to 2007, but we have recently seen evidence that it may be in the process of setting a long-term bottom.

US10-Year Treasury Note yields set a record low through September, but the key rate has since established two higher lows. The USDJPY has similarly set a record low through October and since trended steadily higher.

There is scope for higher US Treasury yields going forward, and the USDJPY could continue to climb off of recent lows amidst changes in key rate differentials.

View a guide on trading currencies using interest rate expectations.

US Dollar / Japanese Yen Valuation Forecast

USDJPY Valuation Forecast: Neutral

USDJPY_US_Dollar_Japanese_Yen_Exchange_Rate_Forecast_body_Picture_7.png, USDJPY: US Dollar Japanese Yen Exchange Rate Forecast

Source: Bloomberg

The Yen remains overvalued against the US Dollar but we are not expecting a meaningful correction for the time being as conflicting forces lock the currency in a narrow range below the 80.00 figure. On one hand, safe-haven flows continue to be attracted to the Yen’s ample liquidity and store-of-value properties (given a historically paltry inflation rate). On the other, the threat of intervention remains ever-present, spooking markets any time USDJPY descends toward the 76.00 level. On balance, we see it as prudent to stand aside for now until the Eurozone debt crisis plays out and risk aversion abates, opening the door for a fundamentally-driven USDJPY advance along with rising US Treasury yields.

What is Purchasing Power Parity?

One of the oldest and most basic fundamental approaches to determining the “fair” exchange rate of one currency to another relies on the concept of Purchasing Power Parity. This approach says that an identical product should cost the same from one country to another, with the only difference in the price tag accounted for by the exchange rate. For example, if a pencil costs €1 in Europe and $1.20 in the US, the “fair” EURUSD exchange rate should be 1.20. For our purposes, we will use the PPP values provided annually by Bloomberg. We compare these values to current market rates to determine how much each currency is under- or over-valued against the US Dollar.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.