The Japanese yen (USD/JPY) has failed to benefit properly from the recent plunge in the DXY index. Since the start of October, the dollar strength index has slid 3.3%. However, the US dollar to yen exchange rate has corrected only 0.17%. This analysis reveals that the dollar remains resilient against the Japanese currency despite having major pullback against the pound and euro.
The effect was quite evident on Thursday as the GBP/USD and the EUR/USD pairs showed 0.29% and 0.16% gains, respectively. However, the Japanese yen slid 0.04% against the greenback on the same day despite a 0.12% drop in the DXY index.
This shows that the demand for a safe haven currency is decreasing as the investor focus shifts toward the ongoing rally in the euro and pound. For a better USD/JPY forecast, let’s analyze the forex pair on the daily chart. The following chart shows that the yen appears to be set to rally in the coming weeks.
This is because the pair appears to have formed a double top pattern after a failed breakout attempt from its October 2022 highs. The recent lower low on the daily chart confirms this thesis and only a breakout above 151.944 can invalidate this forecast.
