USD/JPY forecast: 151 seems plausible, 152 may be a stretch

USD/JPY is clinging to 150 despite the weaker US dollar on Tuesday, as there seems little reason for traders to bid the yen. And unless we receive a compelling reason to buy then yen via a surprisingly hawkish BOJ or broad risk-off environment, it becomes difficult to construct an overly bearish case for USD/JPY whilst the Fed remain quiet about rate cuts.

Yen futures large speculator positioning – COT report

With that said, I did outline in the weekly COT report that bearish bets against yen futures bears are near a sentiment extreme. And that does run the risk of yen futures holding above their 2023 lows, which equates to USD/JPY failing to break above its 2023 highs. Yet patience is required as this is on the weekly charts. And it doesn’t mean that USD/JPY can’t perform another leg higher towards 152 before we see a decent retracement. For now, USD/JPY remains in the ‘buy the dip’ category, given its strong trend.

USD/JPY technical analysis (daily chart)

Technically, the USD/JPY trend remains firmly bullish on the daily chart. Prices are consolidating around 150 and holding above the 10-day EMA, and a ‘spinning top’ doji formed on Tuesday to show indecision around current levels. Traders should be on guard for spikes in either direction before the ‘real move’ unfolds. But due to its dominant bullish trend, the bias remains bullish and to seek bullish setups around support levels if prices retrace lower – as a rise to 151 at a minimum seems plausible.

Note potential support levels to seek bullish setups:

149.72 (10-day EMA)
149.30 (volume cluster)
148.95 – 149 (20-day EMA, round number)

USD/JPY technical analysis (4-hour chart)

The 4-hour chart shows that USD/JPY is trading within a similar pattern to the retracement seen at the later stages of January. Note that the EMAs are fanning out in the correct bullish sequence, and retracements have been shallow during its strong bullish trend. Perhaps we'll see a dip lower at the Tokyo open, but I'd prefer to seek dips than short personally. Ultimately, USD/JPY is preferred on a 'buy the dip' basis. But the closer we get to the BOJ intervention highs / 152, the greater the odds that the market will want to naturally snap back like it did in November.

-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge

How to trade with City Index

You can trade with City Index by following these four easy steps:

Open an account, or log in if you’re already a customer

• Open an account in the UK
• Open an account in Australia
• Open an account in Singapore
Search for the market you want to trade in our award-winning platform
Choose your position and size, and your stop and limit levels
Place the trade

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.