Japanese Yen Forecast: USD/JPY Seven-Week Resistance Standoff Faces Fed, BoJ

Japanese Yen Technical Forecast: USD/JPY Weekly Trade Levels

• USD/JPY has repeatedly failed to secure a weekly close above major resistance, leaving the September recovery vulnerable to another reversal.
• A two-week pullback extended more than 1.8% from the October high before finding support, with the subsequent rebound now approaching pivotal resistance near the 52-week moving average.
• Range breakout in focus: a topside breach would strengthen the case for a larger bullish reversal, while a break below yearly-open support would expose a deeper correction within the broader July downtrend.
• The Fed and BoJ rate decisions, U.S. inflation data and month-end positioning could fuel significant volatility into the weekly close.
• Resistance 158.08/44 (key), 159.75, 160.74- Support 156.67 (key), 155.24, 151.95-152.69

The Japanese Yen is back on the defensive as USD/JPY attempts to extend its latest recovery from critical technical support. While the broader advance remains vulnerable beneath a well-defined resistance barrier, the resilience of buyers near the yearly open has kept the prospect of a larger bullish breakout alive. The stakes are particularly high heading into Wednesday's Federal Reserve decision, followed by key U.S. inflation data and Friday's Bank of Japan rate announcement. With interest-rate expectations and Treasury yields likely to dictate near-term direction, the reaction into these technical thresholds could prove decisive for the November outlook. Battle lines are drawn on the USD/JPY weekly technical chart.

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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 USD/JPY was approaching major resistance and that, “From a trading standpoint, rallies would need to be limited to 159.75 for the trend to remain intact with a close below 156.67 once again needed to put the bears in control.” USD/JPY registered an intraday high at 159.04 later that week before exhausting with price continuing to hold below confluent resistance at 158.08/44 for the past seven-weeks. Multiple attempts to break above this pivot zone have failed to mark a weekly close with last week’s pullback extending more than 1.8% off the October high.

The decline exhausted at the median line of the July pitchfork with USD/JPY closing the week just above yearly open support at 156.67. A recovery of more than 1.1% is once again approaching resistance ahead of major event risk into the close of the month and puts the focus on possible inflection off this zone.

The resistance zone in focus is at 158.08/44- a region is defined by the January high-week close (HWC) and the 50% retracement of the July decline. Note that the 52-week moving average rests just lower at 157.98. A topside breach / weekly close above this threshold is needed to fuel the next leg of the September rally with subsequent resistance objectives eyed at the 61.8% retracement at 159.75 and the 2024 high-week close (HWC) and the April high at 160.74. Ultimately, the bulls would need to clear the 2024 swing high at 161.95 to mark resumption of the 2025 uptrend towards the yearly highs.

A break / close below the yearly open would expose the 61.8% retracement of the September rally at 155.24- losses below this threshold would risk resumption of the July downtrend with key support steady at 151.95-152.69. This region is defined by the 2022 / 2023 highs and the yearly low close- look for a larger reaction there IF reached.

USD/JPY Weekly RSI (14)

Note that weekly momentum is now approaching 50 as price nears technical resistance. A topside breach above this threshold alongside a weekly close above 158.44 would further reinforce the potential for a breakout to fresh multi-month highs in USD/JPY.

Bottom line: A two-week selloff has rebounded off yearly open support, with the near-term recovery now approaching pivotal resistance into the close of the month. From a trading standpoint, the focus is on breakout of the 156.67-158.44 range for guidance.

USD/JPY event risk builds into the close of the week, with Wednesday’s Fed rate decision setting the tone. A hawkish hold from Chair Warsh could support the dollar, while Thursday’s U.S. GDP and PCE inflation data will shape expectations for a December hike. Attention then turns to Friday’s BoJ decision and Tokyo CPI, where any signal that tightening could resume in December would likely support the yen. Month-end rebalancing may add volatility, particularly if policy guidance drives a sharp move in Treasury and Japanese yields. Stay nimble into the close of the month and watch the weekly close for guidance here. Review my latest Japanese Yen Short-term Outlook for a closer look at the near-term USD/JPY technical trade levels.

USD/JPY Key Economic Data Releases

Economic Calendar - latest economic developments and upcoming event risk.

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--- Written by Michael Boutros, Senior Technical Strategist

Follow Michael on X @MBForex