Japanese Yen Forecast: USD/JPY Stalls Below 160 – Breakout or Reversal?

Japanese Yen Technical Forecast: USD/JPY Weekly Trade Levels

USD/JPY USD/JPY has rallied more than 5% from the February low, pushing to fresh yearly highs before stalling just below the 160 level.
Price is now trading within last week’s range, with momentum divergence suggesting the advance may be losing strength- breakout to offer guidance.
Major event risk next week with Japan CPI and US retail sales, ADP & NFPs on tap
Resistance 160, 160.73, 161.95 (key)- Support 157.70, 156.67, 154.79-155.07(key)

USD/JPY has pushed higher in recent weeks, reclaiming ground steadily and approaching a key psychological level near 160. The rally has been strong, but price is now consolidating beneath this threshold after failing to extend gains into fresh yearly highs. With momentum showing early signs of strain and the pair holding within a defined range, the market is approaching a critical decision point. A decisive break above this level would reinforce the bullish trend, while failure to follow through could trigger a period of consolidation or a deeper pullback. Battle lines are drawn on the USD/JPY weekly technical chart.

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 Weekly

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 was trading into, “resistance into the close of the week / month, and the focus is on a possible inflection off this zone in the days ahead. From a trading standpoint, losses should be limited to 154.79 IF price is heading higher on this stretch with a close above 156.67 needed to fuel another run towards the yearly highs.” Resistance broke the following week with USD/JPY extending more than 5% off the February lows to a fresh yearly high. The advance stalled just ahead of the 160-handle with building momentum divergence suggests the advance may be vulnerable. Price continues to trade within last week’s range- look for the breakout to offer near-term guidance here.

A topside breach exposes topside resistance objectives at the 2024 high-week close (HWC) at 160.74 backed closely by the 2024 swing high at 161.95. Note that the channel resistance converges on this threshold this week – look for a larger reaction there IF reached. Subsequent resistance is eyed at the 1.618% extension of the 2025 advance at 163.33.

Initial weekly support rests with the 2025 HWC at 157.70 and is backed by the objective yearly open at 156.67. Key support and broader bullish invalidation rests with the yearly low-week close (LWC) and the 61.8% retracement of the February rally at 154.79-155.08. A break / weekly close below this threshold would be needed to suggest a more significant high is in place and a larger trend reversal is underway.

Bottom line: USD/JPY is attempting to secure a breakout of the yearly opening-range highs, and the focus is on this push towards 160. From a trading standpoint, losses should be limited to 157.70 IF price is heading higher on this stretch with a break of the monthly highs needed to fuel the next leg of the advance.

Keep in mind we get the release of Japan CPI early next week with US ADP employment, retail sales, and Non-Farm Payrolls on tap into the monthly cross. Markets have now discounted any rate cuts this year with Fed fund futures now reflecting a 40% probability the central bank may hike rates by October. With concerns that higher energy prices will bleed into inflation continuing to mount, the employment data will be critical in determining the Federal Reserve’s next move and a weaker-than-expected print on employment could weigh on expectations for higher rates later this year. In the meantime, sentiment will be largely driven by development in the Middle East with regards to the Iran war. Keep your eyes on the headlines and watch the weekly close here for guidance. Review my latest Japanese Yen Short-term Outlook for a closer look at the near-term USD/JPY technical trade levels.

USD/JPY Key Economic Data Releases

Economic Calendar - latest economic developments and upcoming event risk.

Active Weekly Technical Charts

--- Written by Michael Boutros, Senior Technical Strategist

Follow Michael on X @MBForex

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Products and services available depend on your location and the entity holding your account. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

Please note that foreign exchange and other leveraged trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved, seeking independent advice if necessary.

FOREX.com is a trading name of GAIN Global Markets Inc. which is authorized and regulated by the Cayman Islands Monetary Authority under the Securities Investment Business Law of the Cayman Islands (as revised) with License number 25033.

FOREX.com may, from time to time, offer payment processing services with respect to card deposits through StoneX Financial Ltd, Moor House First Floor, 120 London Wall, London, EC2Y 5ET.

GAIN Global Markets Inc. has its principal place of business at 30 Independence Blvd, Suite 300 (3rd floor), Warren, NJ 07059, USA., and is a wholly-owned subsidiary of StoneX Group Inc.