Japanese Yen Forecast: USD/JPY Bulls Eye Breakout at Key Resistance

Japanese Yen Technical Forecast: USD/JPY Weekly Trade Levels

• USD/JPY rebounds sharply off multi-year uptrend support post-FOMC
• USD/JPY bulls now testing confluent resistance into the yearly moving average- PCE on tap
• Resistance 148.84, 149.23 (key), 150.88- Support 147.05, 146.10/70 (key), 143.67-144.10

The Japanese Yen is poised to mark a fifth weekly decline against the U.S. Dollar with USD/JPY rallying into range resistance at multi-week highs today. The focus is on a potential breakout here after the bulls defended multi-year slope support, and the fate of the post-Fed rally now hinges on key inflation data into the close of the week. Battle lines 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 my last Japanese Yen Technical Forecast we noted that the USD/JPY was trading just above critical support and that the, “immediate focus is on a breakout of the 146.10-148.90 zone for guidance here. From a trading standpoint, losses should be limited to the 2021 trendline IF price is heading higher on this stretch with a close above the yearly moving average needed to fuel the next leg of the advance.” An attempted break of support on FOMC day failed with a sharp reversal now extending more than 2.3% off the September low.

The advance is testing resistance today at the 61.8% retracement of the August decline (148.84) with the 52-week moving average converging on downtrend resistance (75% parallel in blue) just higher near ~149.23. We are looking for a reaction off this mark with a breach / close above needed to suggest a more sigfniicant low was registered last week / a larger trend shift is underway. Subsequent resistance objectives are eyed at the 100% extension of the April advance / July high at 150.88/91 and 151.63/95- a region defined by the 61.8% retracement of the yearly range and the 2023/2023 swing highs. Look for a larger reaction there IF reached

Monthly open support rest at 147.05 with key support steady at the June high close / 38.2% retracement of the April rally at 146.10/70- Note that the 2021 slope line converges on this threshold over the next few weeks and a break / close below this pivot zone would invalidate the multi-year advance in USD/JPY and threaten another bout of accelerated losses. Subsequent support objectives rest at the 2024 & 2025 low-week closes (LWC) / 61.8% retracement at 143.68-144.10 (area of interest for possible downside exhaustion / price inflection IF reached).

Bottom line: USD/JPY rebounded off multi-year uptrend support last week with a five-week rally now approaching confluent resistance into the yearly moving average. From a trading standpoint, losses should be limited to the monthly open at 147.05 IF price is heading higher on this stretch with a weekly close above slope resistance needed to suggest a larger turn is underway here.

Keep in mind we get the release of key Japanese inflation data tonight with U.S. Core Personal Consumption Expenditures (PCE) on tap tomorrow. Stay nimble into the releases 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

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--- Written by Michael Boutros, Sr Technical Strategist

Follow Michael on X @MBForex