Japanese Yen Forecast: USD/JPY Breakout Stalls at Key Pivot Zone
USD/JPY surged into the October open with a 5.3% rally to fresh eight-month highs exhausting into resistance. Battle lines drawn on the USD/JPY weekly technical chart.
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Japanese Yen Technical Forecast: USD/JPY Weekly Trade Levels
- USD/JPY breakout has slowed with price stalling below a key pivot zone after a strong monthly open
- Traders remain focused on China trade tensions and the ongoing U.S. government shutdown as near-term catalysts for volatility
- Risk for inflection here with the outlook constructive while above the yearly moving average
- Resistance 151.63/95, ~153.80, 154.82-155.03 (key)- Support ~149.29, 148.16 (key), 146.10
The Japanese Yen is holding near multi-month lows against the U.S. Dollar, with USD/JPY stalling below a key pivot zone after rallying nearly 9.6% off the yearly lows to fresh eight-month highs. While the broader outlook remains constructive, the near-term focus is on potential exhaustion here with the bulls vulnerable near-term while below trend resistance. The ongoing China trade dispute and the U.S. government shutdown remain central themes, with traders looking to the weekly close for guidance on the next directional move. Battle lines drawn on the USD/JPY weekly technical chart.
Review my latest Weekly Strategy Webinar for an in-depth breakdown of this Yen setup and more. Join live on Monday’s at 8:30am EST.
Japanese Yen Price Chart – USD/JPY Weekly
Chart Prepared by Michael Boutros, Sr. Technical Strategist; USD/JPY on TradingView
Technical Outlook: In last month’s Japanese Yen Technical Forecast we noted that a five-week rally was, “approaching confluent resistance into the yearly moving average. From a trading standpoint, losses should be limited to the monthly open at 147.05 IF price is heading higher on this stretch with a weekly close above slope resistance needed to suggest a larger turn is underway here.” USD/JPY marked a low close at 147.47 the following week before reversing sharply higher with the advance exhausting last week into resistance at 151.63/95- a region defined by the 61.8% retracement of the yearly range and the 2022/2023 swing highs. The focus is on a reaction off this key hurdle over the next few weeks.
Initial weekly support rests with the 52-week moving average (currently ~149.29) and is backed by the 38.2% retracement of the April advance at 148.16. Note that this level converges on the 2021 trendline line into the start of November and break / weekly close below would be needed to suggest a more significant high is in place / trend reversal is underway. Subsequent support objectives are eyed at the June high-close at 146.10 and the yearly low-week close (LWC) at 143.68.
A close above this key pivot zone exposes the highlighted slope confluence near ~153.80 and the 78.6% retracement / November high-close (HC) at 154.81-155.03- both levels of interest for possible topside exhaustion / price inflection IF reached. Strength surpassing the 155-handle would suggest a more significant breakout is underway with the next major technical consideration eyed at the 2025 HWC / April HC at 157.70-158.45.
Bottom line: The USD/JPY breakout has exhausted into lateral resistance and September advance may be vulnerable near-term while below this pivot zone. From a trading standpoint, a good region to reduce portions of long-exposure / raise protective stops- losses should be limited to the yearly moving average IF price is heading higher on this stretch with a close above 155 ultimately needed to fuel the next major leg of this advance.
Note that markets will be closely monitoring the escalating China trade dispute as concerns mount about President Xi’s move to restrict exports of rare earth minerals and magnets. At the same time, the ongoing government shutdown remains in focus as traders brace for a protracted resolution to the ongoing stalemate in Washington. Stay nimble here and watch the weekly close for guidance. Review my latest Japanese Yen Short-term Outlook for a closer look at the near-term USD/JPY technical trade levels.
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--- Written by Michael Boutros, Sr Technical Strategist
Follow Michael on X @MBForex
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