Japanese Yen Short-term Outlook: USD/JPY Surges to Fresh Yearly High- Big Test for the Bulls

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

• USD/JPY surges to fresh yearly highs, extending a steady advance and marking a sixth consecutive daily gain for the first time since October.
• Broader structure remains constructive, but a decisive reaction here will be critical in determining whether the next leg higher unfolds or a deeper corrective pullback develops.
• Resistance 158.88 (key), 160.22, ~161- Support 157.70/90, 157.19 (key), 156.67

USD/JPY has surged to fresh yearly highs, extending a steady advance that has carried the pair to its highest levels since mid-2024. The move places price into a key resistance zone, where the immediate focus is on whether the rally can extend or shows signs of near-term exhaustion. While the broader multi-month structure remains constructive, the reaction at this level will be important in determining whether the advance can sustain momentum or if a corrective phase develops and price action around this threshold is likely to define the next phase of the trend. Battle lines are drawn on the USD/JPY short-term technical charts.

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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 approaching, “resistance into the 2025 yearly open and a breakout of the initial December opening-range keeps the near-term focus higher for now. From a trading standpoint, losses should be limited to 155.36 IF price is heading for a breakout on this stretch with a close above 157.90 ultimately needed to mark resumption of the broader uptrend.” A brief dip below the 155 handle four-days later rebounded off the December lows before rallying more than 3% into the yearly open. The advance is now testing the 2025 high at 155.88 with price poised to mark a sixth-consecutive daily advance for the first time since October. The focus is on a potential reaction off this mark with a close above needed to keep the immediate advance viable 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 the steady march higher in USD/JPY with the price stretching to the highest levels since July of 2024 ahead of the US open today. Initial support rests with the 2025 high-day close (HDC) and the November high at 157.70/90 and is backed by the objective 2025 yearly open at 157.19. Bullish invalidation is now raised to the 2026 yearly open at 156.67 and a break / daily close below this level would be needed to suggest a more significant high is in place and a larger correction is underway within the multi-month uptrend. Such a scenario would shift the focus toward the December lows near 155.00/35.

A topside breach / daily close above this pivot zone would keep the immediate advance viable with subsequent resistance objectives eyed at the April 2024 high at 160.22. Keep in mind the upper parallel of an embedded channel (red) converges on this level into the close of the week- look for a larger reaction there IF reached. The next major technical considerations are eyed at pitchfork resistance, currently near ~161, and the 2024 high-day close (HDC) at 161.69. Keep an eye on momentum here- daily RSI is approaching the 70-mark with the intraday oscillator already in overbought territory.

 

Bottom line: The USD/JPY rally is testing resistance here and while the broader outlook remains constructive, the immediate advance may be vulnerable to near-term exhaustion. From a trading standpoint, a good zone to reduce portions of long-exposure / raise protective stops – losses should be limited to 157.19 IF price is heading higher on this stretch with a close above 158.88 needed to fuel the next leg of the advance.

Today’s CPI release showed an easing in the pace of price growth with the Core reads holding 2.6% y/y and 0.2% m/m. While the data does open the door for further Fed easing in the months ahead, the release has not shifted rate expectations ahead of the US open with markets pricing a 73% probability the first rate cut this year will come in June. Keep in mind we get the release of US retail sales and PPI tomorrow. Stay nimble into the release 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.

Key USD/JPY Economic Data Releases

Economic Calendar - latest economic developments and upcoming event risk.

Active Short-term Technical Charts

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• Gold Price Outlook: XAU/USD Bulls Charge Record High- Breakout Risk Rises into Year-End
• British Pound Short-term Outlook: GBP/USD Coils Below Pivotal Resistance Ahead of BoE
• Euro Short-term Outlook: EUR/USD Rips Higher Post-Fed – Bulls Eye Breakout of Uptrend Resistance
• Canadian Dollar Short-term Outlook: USD/CAD Collapse Continues After Fed & BoC Decisions
• Swiss Franc Short-term Outlook: USD/CHF 8-Day Rally Fuels V-shaped Recovery into Resistance

--- Written by Michael Boutros, Senior Technical Strategist

Follow Michael on X @MBForex