USD/JPY Forecast 16/12: Carry Trade Dynamics Persist (Video)
By Christopher Lewis
Christopher Lewis is a seasoned Forex trader with over two decades of experience in the financial markets. He has been a consistent contributor to Daily Forex since its inception, sharing his insights on Forex trading. Lewis also writes for prominent online publications such as FX Empire, Investing.com, and his own website, The Trader Guy, where he focuses on technical analysis.
In this forecast, Lewis highlights the USD/JPY pair's recent behavior, noting its initial rally followed by a hesitant pullback. He emphasizes the importance of support levels and yield differentials in favor of the US dollar. Lewis argues that carry trade dynamics and structural Japanese policy constraints present buying opportunities during pullbacks.
The analyst acknowledges the current uncertainty surrounding the Federal Reserve's actions. However, he asserts that the interest rate differential will continue to benefit the US dollar in the long term. Lewis predicts that the USD/JPY pair will likely rise, even if a breakdown occurs. He mentions the 50-day EMA as a potential support level at 154 yen, with a more likely support at 152 yen.
Lewis believes that the carry trade will regain prominence, especially if the US maintains a hawkish stance. He points out that leading economic indicators suggest a promising outlook for the US economy in 2026. Additionally, Lewis highlights Japan's structural challenges in implementing monetary policy tightening, which he sees as a persistent buying opportunity for patient investors, both in the long and short term.
For those interested in trading the USD/JPY pair, Lewis provides a list of forex brokers in Japan on the Daily Forex website. He encourages readers to explore these options and stay informed about the latest forex analysis and predictions.
