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USD/JPY Rate Forecast:  US Yields Pave the way for Move Above 110

USD/JPY Rate Forecast: US Yields Pave the way for Move Above 110

Tyler Yell, CMT, Currency Strategist

USD/JPY Rate Forecast Talking Points:

  • The ONE Thing: JPY won’t strengthen if US yields are climbing, and they are. Risk appetite appears firm after Chinese Industrial Production data beat expectations and US yields have punched higher while USD/JPY has moved above 110, a level that previously looked like formidable resistance.
  • USD/JPY Price Forecast:The spot rate moved above the evening star pattern that recently emerged against the 110.04 barrier and just below the 200-DMA. The inability for bears to take advantage of that short-term momentum reversal and the widening yield curve picture helps point toward 112.27/38, which is a confluence of major trendlines and Fibonacci resistance.
  • Whether or not US Dollar weakness is about to resume from its 15-month trend remains a constant question to institutions and investors alike. However, if material break higher in the US 10 year yield is imminent, USD/JPY upside may be as well.
  • USDJPY Rallies Above 110.20 Following Upward Revisions to Retail Sales
  • USD/JPY Rate Insight from IG UK: Retail traders are less net-long than yesterday and compared with last week. Recent changes in sentiment warn that the current USDJPY price trend may soon reverse higher despite the fact traders remain net-long.Retail Sentimentis utilized as a contrarian technical trading tool, an insight derived from our Traits of Successful Traders research

See what we see when looking at the Japanese Yen. Check out our new Q2 Yen Forecast here.

USD/JPY Hourly Chart: JPY Weakness Is Back On With USD/JPY > 110.04

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Chart Source: Pro Real Time with IG UK Price Feed. Created by Tyler Yell, CMT

Technical Levels on USD/JPY:

Resistance: 111/ 112.30 (Psychological, Trendline resistance)

Spot: 110.30

Support: 109.15/108.64 (trend structure support from May’s advance)

On multiple timeframes, JPY strength has reversed when looked through the lens of Ichimoku. Current spot is above price from 26-periods ago suggesting bullish momentum on both the daily and hourly chart while the current spot rate is above the topedge of the cloud showing a bulling stature that is not easily fought.

The support point in focus can best be seen on the hourly Ichimoku chart at 109.15 that aligns with a pivot near an hourly cloud that was seen late last week. With price and momentum above the cloud, traders should anticipate further JPY weakness.

New to Ichimoku? Click here for a free guide if you’d like to learn more

USD/JPY Insight from IG UK Client Positioning –Stronger Bearish Bias Develops

Source: IG CLIENT SENTIMENT, data provided by IG

We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests USDJPY prices may continue to fall. Yet traders are less net-long than yesterday and compared with last week. Recent changes in sentiment warn that the current USDJPY price trend may soon reverse higher despite the fact traders remain net-long (emphasis mine.)

More For You:

Are you looking for longer-term analysis on the U.S. Dollar? Our DailyFX Forecasts for Q2 have a section for each major currency, and we also offer an excess of resources on USD-pairs such as EUR/USD, GBP/USD, USD/JPY, AUD/USD. Traders can also stay up with near-term positioning via our popular and free IG Client Sentiment Indicator.

Forex Trading Resources

DailyFX offers a surplus of helpful trading tools, indicators, and resources to help traders. For those looking for trading ideas, our IG Client Sentiment shows the positioning of retail traders with actual live trades and positions.

Our trading guides bring our DailyFX Quarterly Forecasts and our Top Trading Opportunities, and our real-time news feed has intra-day interactions from the DailyFX team. And if you’re looking for real-time analysis, our DailyFX Webinars offer numerous sessions each week in which you can see how and why we’re looking at what we’re looking at.

If you’re looking for educational information, our New to FX guide is there to help new(er) traders while our Traits of Successful Traders research is built to help sharpen the skill set by focusing on risk and trade management.

---Written by Tyler Yell, CMT

Tyler Yell is a Chartered Market Technician. Tyler provides Technical analysis that is powered by fundamental factors on key markets as well as t1rading educational resources. Read more of Tyler’s Technical reports via his bio page.

Communicate with Tyler and have your shout below by posting in the comments area. Feel free to include your market views as well.

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