USD/JPY Forecast 27/08: Buyers Defend Dips (Video)

(MENAFN- Daily Forex) The US dollar initially fell against the Japanese yen during the trading session here on Wednesday, as we are looking at a situation where traders are watching the Bank of Japan, and the carry trade.

USD/JPY

The US dollar initially fell against the Japanese yen during the trading session here on Wednesday but then turned around to show signs of life as traders continue to see a lot of volatility in this pair, as well as many others.

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Ultimately, the carry trade is still very much in play here, and with the Bank of Japan intervening multiple times, we have seen a little bit of suppression of price discovery. But ultimately, this is a market that is trying to get back to the 160 yen level, an area where we have not only seen resistance previously multiple times going in the past, but we also have the 50-day EMA in the same region.

Carry Trade and Key Moving Averages

Short-term pullbacks at this point in time are likely to test the uptrend line that we have been in for some time, with the 200-day EMA sitting just below there to offer support, all things being equal. USD/JPY is a market that I will remain long of. I've been long in for months, and I'm actually buying little micro positions on each dip to build my carry trade portfolio.

EURUSD Chart by TradingView

If we can get above the 160 yen level on a daily close, then I think it opens up the possibility of a challenge of the 162 yen level, an area that I think will remain important from previous action. And then you start to worry about intervention again.

Nonetheless, the carry trade is a very real thing, and the Japanese can only get so tight. The speech at Jackson Hole on Friday from Kevin Warsh could be the next big mover here.

Want to trade our USD/JPY forex analysis and predictions? Here's a list of forex brokers in Japan to check out.

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