USD/JPY Forecast Today 24/01: Waiting For The BOJ (Chart)

(MENAFN- Daily Forex)

• The US dollar had initially tried to rally during the trading session on Thursday but gave back gains showing signs of hesitation.
• At this point, the market looks very likely to continue to bounce around as it waits to see what the Bank of Japan does next.
• On Friday, the Bank of Japan is coming out with an interest rate decision, and therefore I think it comes down to the question of whether it does anything to tighten monetary policy.

At this point, we will likely see a knee-jerk reaction to whatever happens next. Therefore, I think if the Bank of Japan suddenly sounds like it is going to be tight, we could see this market plunge. Yet, the interest rate differential will continue to favor the US dollar quite drastically, so I think that would end up being a buying opportunity unless, of course, the Bank of Japan does something unprecedented. While rates have risen in Japan just a bit, the reality is that the differential still favors the greenback quite drastically. Of course, the US economy is by far one of the strongest in the world right now, in both hard and soft numbers. Quite frankly, if Trump gets even remotely close to what he's trying to get done in America, the United States could be back to the 1980s.

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The technical analysis for the USD/JPY market is somewhat sideways at the moment, but it's also worth noting that we have been in an uptrend for quite some time. Therefore, I think we are working off some of the froth but also trying to sort out whether the Bank of Japan is going to be an issue. I suspect that by the end of the day on Friday, we should have quite a few questions answered, so I am cautious about getting overly aggressive one way or the other until the BoJ releases all of its noise.

If we were to break down below the 50 Day EMA, then I suspect that somewhere between there and the 200 Day EMA we would find buyers. On the other hand, if we break out to the upside, once the ¥158 level is overcome, as a barrier, it could open up a move to the ¥160 level.

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