USD/JPY Forecast Today 13/05: Buyers Target 160 Yen

(MENAFN- Daily Forex)

The US dollar initially fell against the Japanese yen on Tuesday but has turned around to show signs of strength yet again. This is a market that quite frankly is still in the midst of trying to figure out whether or not they can actually continue to push above the 158-yen level.

This is a market that should continue to be positive in the sense that the interest rate differential certainly continues to favor the US dollar and the fact that the 50-day EMA sits right there suggests that there is a potential barrier, but if we were to break above there, then it's possible that traders could really start to push this thing toward the 160 yen level. Short-term pullbacks I do believe are buying opportunities and that of course is something that you need to pay close attention to.

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The interest rate differential continues to be a major driver, but it also allows the market to test those swing highs again as it could open up a bigger move towards the 160.50-yen level which was essentially a swing high from 1990. Because of this, we will have to keep in mind that the Bank of Japan may continue to look at the USD/JPY currency pair very closely as the central bank did intervene recently.

But all things being equal, this is a market that I think continues to be one that you have to be very cautious and what I mean by that is the occasional headline will come across and spook traders, but we'll ultimately see this as a market that looks as if it has a hard floor in the form of the 200-day EMA, which is right around the 155 yen level.

We have been bouncing every time we pull back, and I think it's probably only a matter of time before we truly get moving to the upside and in that environment, I do anticipate that eventually the FOMO traders will join. This has been a long-term uptrend that's been going on for several years now and ultimately the Bank of Japan is in a situation where it cannot tighten monetary policy very much. I favor the US dollar.

EURUSD Chart by TradingView

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