Japanese Yen Short-term Outlook: USD/JPY Coil Set to Snap
USD/JPY surged 3.3% off the July low with the bulls now charging toward the topside of a multi-month consolidation. Battle lines drawn on the short-term technical charts.
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Japanese Yen Technical Forecast: USD/JPY Short-term Trade Levels
- USD/JPY coiled within multi-month consolidation pattern- bulls charging towards resistance today
- USD/JPY risk for topside exhaustion / price inflection ahead- U.S. CPI, Retail Sales on tap
- Resistance 147.70s, 148.65, 149.50/62 (key)- Support 146.15, 144.07/23 (key), 142.35
The U.S. Dollar is poised snap a two-week losing streak against the Japanese Yen with USD/JPY surging nearly 3.4% off the monthly lows. The advance takes price towards resistance at the topside of a multi-month consolidation pattern- we’re on breakout watch heading into the close of the week. Battle lines drawn on the USD/JPY short-term technical charts.
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 last month’s Japanese Yen Short-term Outlook, we noted that USD/JPY was in consolidation above the May lows and that, “From a trading standpoint, losses would need to be limited to the 143-handle IF price is heading for a breakout on this stretch with a close above 146.15 ultimately needed fuel the next leg of the advance.” USD/JPY held a test of support into the July open with the subsequent rally clearing Fibonacci resistance this week. The advance is now approaching consolidation resistance, and the focus is on a reaction into the May trendline just higher.
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 an embedded channel formation off the monthly low (blue) with the lower parallel highlighting near-term support back at the 61.8% retracement of the May range at 146.15. Key support now rests with the objective monthly open / weekly low at 144.07/23- a break / close below this threshold exposes subsequent support objective at the May opening-range lows (ORL) at 142.35 and the yearly low-day close (LDC) at 141.56. Longer-term key support remains unchanged at 140.49.
Initial resistance is eyed along the May trendline (currently near 147.70s) and is backed by the December low at 148.65. Ultimately, a breach / close above the March high-day close (HDC) / 200-day moving average at 149.50/62 would be needed to suggest a more significant trend reversal is underway. Subsequent resistance objectives eyed at 150.88 and 151.62/94 in the event of a breakout.
Bottom line: USD/JPY is now approaching resistance at the May consolidation slope- looking for a reaction on stretch into this trendline. Form a trading standpoint, look to reduce portions of long-exposure / raise protective stops on a stretch towards this slope- losses would need to be limited to 146.15 IF price is heading for a breakout on this stretch with a close above 149.50 ultimately needed to fuel the next major leg of the April advance.
Keep in mind we get key inflation data from the US on Tuesday with retail sales on tap later in the week. Stay nimble into the releases and watch the weekly closes here for guidance. Review my latest Japanese Yen Weekly Forecast for a closer look at the longer-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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