USD/JPY Technical Analysis: Toward 2018 High with Intermarket Support

USD/JPY Rate Forecast Talking Points:

  • The ONE Thing: Key markets are helping to weaken the JPY, which is taking USD/JPY higher. Higher equities as seen in the Nikkei and higher US Treasury yields, especially on the front end are guiding USD/JPY toward the 113.39 JPY per USD 2018 high, and possibly beyond.
  • The markets are anticipating a supportive Federal Reserve at Wednesday’s FOMC meeting. The Fed looks set to keep on their path of tightening monetary policy as doubts remain to where the neutral rate is and how much activity is needed to close the gap to prevent the US Economy from overheating. Any hawkish surprises would likely lift USD/JPY through the YTD high.
  • Technical Analysis of the Japanese Yen: USD/JPY holds a bullish structure north of 109.97, which was the August low. The intermarket support of higher yields and higher equities on falling volatility seem also to support a weakening JPY.

KEY TECHNICAL LEVELS FOR JAPANESE YEN RATE TO US DOLLAR: