USD/JPY Price Forecast for the Week Ahead: The US Dollar Continues to Climb

The US Dollar strengthened against the Japanese yen throughout the week, surpassing the psychologically significant 150 mark. In doing so, the market is demonstrating its disregard for the Bank of Japan and its warnings, as the BOJ has previously attempted to intervene and we are almost 1000 pips above that level. In this situation, it would appear that the central bank has no choice but to allow the currency to devalue.

Purchasing "unlimited bonds" is equivalent to producing "unlimited currency," hence the supply of Japanese Yen will continue to be a significant drawback to the exchange rate. Consequently, this is a one-way exchange, but also one that you do not necessarily wish to alter. It would be reasonable to expect a retreat sooner or later, if for no other reason than sheer tiredness.

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The 150 level will be sustained, as will the 147.50 and 145 levels, in that order. We are overextended, but nonetheless, this is a one-way street, and you cannot fight it. If the Bank of Japan does interfere, it will most likely be an excellent purchasing opportunity. I do not have a target at this time because, very simply, it depends on when the Bank of Japan eventually concedes that interest rates must rise in their nation, or they will no longer have a currency. The greatest obstacle they confront is that Japan would never be able to repay its enormous debt at increased interest rates.