Japanese Yen Short-term Outlook: USD/JPY Bulls Eye Yearly High- Fed on Tap

Japanese Yen Technical Forecast: USD/JPY Short-term Trade Levels

• USD/JPY has broken higher from a recent consolidation, extending its recovery from monthly lows.
• Price is now approaching a major resistance zone near the yearly highs.
• A sustained move above resistance would signal continuation / acceleration of the broader uptrend.
• Failure at resistance could trigger a pullback, especially with major event risk in focus (Fed, PCE)
• Resistance 160.22/74 (key), 161.69/95, 162.73 - Support 159.37, 158.64/71 (key), 157.33/70

USD/JPY has extended its advance in recent sessions, breaking out of consolidation and pushing back toward a key resistance zone near the yearly highs. The move reflects strengthening near-term momentum, but the broader outlook now hinges on how price reacts at this barrier. With major event risk on tap, the reaction at resistance could prove decisive in determining whether the rally continues or gives way to a pullback. Battle lines drawn on the USD/JPY short-term technical charts heading into today’s Fed decision.

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 Daily

Chart Prepared by Michael Boutros, Sr. Technical Strategist; USD/JPY on TradingView

Technical Outlook: In my last Japanese Yen Short-term Outlook, we noted that USD/JPY was testing trend support and that, “a break below the March slope would threaten a decline towards pivotal support at the 38.2% retracement of the late-February advance and the 2025 high-day close (HDC) at 157.33/70.” Price briefly registered an intraday low at 157.59 days later before rebounding sharply. The subsequent rally broke out of a multi-week consolidation pattern last week with USD/JPY now up nearly 1.7% from the monthly low.

The advance is now approaching pivotal resistance at 160.22/74- a region defined by the April 2024 swing high, the March high, and the 2024 high-week close. The immediate focus is on a reaction off this threshold with the FOMC rate decision on tap in just a few hours.

Japanese Yen Price Chart – USD/JPY 240min

Chart Prepared by Michael Boutros, Sr. Technical Strategist; USD/JPY on TradingView

A closer look at Japanese Yen price action shows USD/JPY trading within the confines of a proposed ascending pitchfork extending off the monthly low. Note that the median-line converges on the 160.22/74 region into the close of the week and further highlights the technical significance of this key pivot zone. A topside breach / daily close above this threshold is needed to mark uptrend resumption with subsequent resistance objectives eyed at the 2024 high-day close (HDC) / high at 161.69/95 and the 61.8% extension of the January rally at 162.73. Both levels of interest for possible topside exhaustion / price inflection IF reached.

Weekly open support rests at 159.37 with key support / bullish invalidation now raised to the April low-day close (LDC) and the monthly open at 158.64/71. Losses below this level would suggest a more significant high is in place and a larger trend reversal is underway back towards the 157.33/70 support pivot.

 

Bottom line: The USD/JPY is testing key resistance at the yearly high ahead of major event risk. From a trading standpoint, a good zone to reduce portions of long-exposure / raise protective stops – losses would need to be limited to the weekly open IF price is heading higher this stretch with a close above 160.74 needed to fuel the next major leg of the advance.

Although the Fed is widely expected to leave rates unchanged, the focus will be on the accompanying commentary with respect to the impact higher energy prices is having on the outlook for inflation and monetary policy. This will be Powell’s final meeting as Chairman and traders will be questioning whether he plans to stay onboard until his term ends in 2028. Keep in mind we also get a key inflation update tomorrow with US Core Personal Consumption Expenditures on tap into the close of the month. Stay nimble into the monthly cross and watch the weekly close for guidance here. Review my latest Japanese Yen Weekly Forecast for a closer look at the longer-term USD/JPY technical trade levels.

Key USD/JPY Economic Data Releases

Economic Calendar - latest economic developments and upcoming event risk.

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• Swiss Franc Short-term Outlook: USD/CHF Bulls Rejected at Key Resistance

--- Written by Michael Boutros, Senior Technical Strategist

Follow Michael on X @MBForex