Japanese Yen Short-term Outlook: USD/JPY Fights to Break 7-Week Range
USD/JPY rallied nearly 2% off the FOMC-lows with the September range intact ahead of key U.S. inflation data. 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 post-Fed rally exhausts just ahead of key resistance
- USD/JPY preserves seven-week price range- breakout pending with U.S. Core CPI on tap
- Resistance 149.55/84 (key), 149.75, 150.88- Support 147.05, 146.54/70, 145.83 (key)
USD/JPY rallied nearly 2% off the FOMC lows registered last week with price trading back within a seven-week range in price. A defense of the April uptrend keeps the focus on a breakout of this critical range in the days ahead with key U.S. inflation data on tap into the weekly close. 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 had carved the September opening-range just above support and that, “rallies should be limited to the 200DMA IF price is heading lower on this stretch with a close below the April trendline ultimately needed to validate a break of the multi-month uptrend.” USD/JPY attempted to break lower last week with the Fed-induced rally taking price back within the multi-month range. A strong reversal off the April slope keeps the focus on a breakout of the September opening-range in the days ahead.
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 rebounding sharply off confluent support at the 61.8% retracement of the July advance at 145.83 (post-Fed intraday low briefly registered at 145.49). Key resistance remains unchanged at 148.55/84- a region defined by the 200-day moving average, the December low, the May high, and the 61.8% retracement of the August decline. A topside breach / close above this threshold is needed to validate a breakout of this seven-week range in price. Subsequent resistance objectives eyed at the 78.6% retracement at 149.75 and the 100% extension of the April advance at 150.88.
Monthly open support rests at 147.05 and is backed closely by the March low / 38.2% retracement of the April rally at 146.54/70. Ultimately, a break / close below 145.83 would be needed to suggest a mor significant high was registered last month / a larger trend reversal is underway. The next major technical consideration is seen at the 61.8% retracement / 100% extension of the August decline at 144.10/43- look for a larger reaction there IF reached.
Bottom line: USD/JPY is poised to mark an eighth-consecutive week within this well-defined range, and the focus remains on a breakout in the days ahead. From a trading standpoint, losses should be limited to 146.54 IF price is heading higher on this stretch with a close above 148.84 needed to fuel the next major leg of the advance.
Keep in mind we get the release of key US inflation data with Core CPI data on top Friday. Stay nimble into the release and watch the weekly close 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
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USD/JPY Forecast: Is Rising Japanese Inflation Supporting the Yen?
As the trading week comes to an end, one of the most relevant developments in the FX market has been the renewed strength of the Japanese yen. This can be seen in the recent performance of USD/JPY, which has fallen nearly 1.0% over the last two trading sessions, highlighting a meaningful recovery in the Japanese currency against the U.S. dollar.
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