USD/JPY Forecast 20/10: Dollar Holds Support Near ¥159

(MENAFN- Daily Forex) The US dollar has rallied a bit in the early part of the trading session, as we are still looking at the carry trade as a main driver.

USD/JPY

The initial movement in the U.S. dollar against the Japanese yen pair was a little bit negative in the early part of the session but found the 200-day EMA to be supportive enough to turn things around and show signs of life.

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By bouncing from the 200-day EMA, it suggests that perhaps we are going to stay in the same range we have been in for a while, with the ¥159 level above offering a bit of a barrier. In other words, more sideways action. That being said, you get paid at the end of every day to hold this pair, and that is the big story here.

Ultimately, I expect a lot of back-and-forth sideways grinding

Sooner or later, we will have to make a bigger decision. The Japanese have an interest rate decision at the end of the month. If we were to break above the ¥159 level, it could open up the possibility of the ¥160.25 level

If we turn around and break down below the 200-day EMA, then it could open up the possibility of a buy-on-the-dip move, with the ¥156.50 level offering a bit of a hard floor in this market. Anything below there could drop off into a much more negative type of situation, but ultimately, I think we're just killing time.

This is a good market right now for short-term traders simply willing to play a range-bound market, collect swap at the end of every day, and leave it as such. I don't expect huge moves, but it is worth noting that after that massive surge higher a couple of weeks back, we have just simply sat here. So, it looks like we're sitting here waiting to determine what's going to happen next.

EURUSD Chart by TradingView

Interest rates in America did climb a little bit during the session, so that has a little bit to do with what we could expect here. But ultimately, I like buying dips for short-term moves, possibly waiting on a breakout.

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