Japanese Yen forecast: USD/JPY 2023 range tightens- battle lines drawn

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By :  ,  Sr. Technical Strategist

Japanese Yen technical forecast: USD/JPY weekly trade levels

  • Japanese Yen losses slow at key technical pivot zone- 2023 range tightens
  • USD/JPY rally vulnerable into 2023 high-week close / yearly moving average
  • Resistance 135.06, ~135.76, 136.66 (key) – support 131.10/30, 129.54 (key), 125.85-126.56

The Japanese Yen is down more than 3.4% against the US Dollar from the March extremes with USD/JPY testing resistance at multi-week highs yesterday. The yearly range continues to contract and while the broader outlook remains constructive, the immediate advance may be vulnerable here and we’re on the lookout for possible exhaustion. These are the updated targets and invalidation levels that matter on the USD/JPY weekly technical chart.

Discuss this Yen setup and more in the Weekly Strategy Webinars on Monday’s at 8:30am EST.

Japanese Yen Price Chart – USD/JPY Weekly

 Japanese Yen Price Chart  USD JPY Weekly  US Dollar vs Japanese Yen Trade Outlook  USDJPY Technical

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 had, “reversed off key resistance with the pullback now reasserting below the yearly moving-average. From a trading standpoint, rallies should be limited by this week’s high IF price is heading lower - look for a reaction on a stretch towards these lower levels for guidance.” We highlighted that, “Ultimately, a break / weekly close below the 2023 low-week close at 129.54 would be needed to shift the focus back towards the next key pivot zone at 125.85-126.56.”

Price registered an intraweek low at 129.63 before rebounding with the recovery now testing resistance back at the objective high-week close at 135.06. This level is backed closely by the 52-week moving average at ~135.76 and the 38.2% retracement of the 2022 decline at 136.66- a breach / weekly close above this threshold is needed to mark resumption of the broader uptrend towards the 140-handle and beyond.

Initial weekly support rests at 131.10/30- a region defined by the 2023 yearly open, the April 2022 high and the 61.8% Fibonacci retracement of the yearly range. Broader bullish invalidation remains unchanged at 129.54.

Bottom line: The recent USD/JPY recovery off support may be vulnerable into these upcoming resistance levels. From a trading standpoint, a good zone to reduce portions of long-exposure / raise protective stops – losses should be limited to 131 If price is heading higher on this stretch with a close above 136.66 needed to fuel the next leg. Review my latest Japanese Yen short-term outlook for a closer look at the near-term USD/JPY technical trade levels.

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US Japan Economic Calendar - USD JPY Key Data Releases - USDJPY Weekly Event Risk - 4-20-2023

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--- Written by Michael Boutros, Sr Technical Strategist with FOREX.com

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