USD/JPY Forecast Today 20/05: USD Falls Against JPY (Video)

(MENAFN- Daily Forex)

• The US dollar has gapped lower against the Japanese yen during the trading session on Monday, but we have then turned around to show signs of least stability and at this point in time I believe that the 145 yen level continues to be an area of great importance.
• The 145 yen level had previously been resistance, but it's also been support in the past as well.
• So a certain amount of market memory would be found here, I would suspect. If we can turn around and rally, I would pay close attention to the 50 day EMA because if we can break above there, then we can really go looking towards the last swing high near the 148.40 yen level.

I do think that the interest rate differential will continue to favor the US dollar. And I think it's probably only a matter of time before we see traders buying the dollar as a result. The Japanese yen, of course, is a currency that has almost no yield to it. And the Bank of Japan can do almost nothing to tighten monetary policy, at least not enough to really change the overall dynamic.

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So, with that being the case, I do prefer buying this pair not shorting it. But this is a market that I think will continue to be noisy because there are so many questions about risk appetite. Yes, I've heard the stories of how the debt downgrade in the United States is going to destroy the US dollar and the US economy. But this has already happened twice. And this is a thing that is just simply a matter of a company catching up with the other two. So there really isn't much going on here. If there's any effect and it looks like there was it's probably a one or two day event tops. So, I still favor the upside and I'll still be a buyer.

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EURUSD Chart by TradingView

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