Japanese Yen Forecast: USD/JPY Bulls Look to Defend July Breakout

Japanese Yen Technical Forecast: USD/JPY Weekly Trade Levels

• USD/JPY July breakout fails at technical resistance- poised to mark third weekly-loss
• USD/JPY approaching longer-term uptrend support- risk for downside exhaustion / price inflection
• Resistance ~148.73, 150.88, 151.63/95 (key)- Support 145.63, 143.68-144.10 (key),139.58-140.49

The Japanese Yen remains on the offensive this week, with USD/JPY pulling back from multi-month highs set in July. Price is now approaching breakout support, and bulls will need to defend this level to keep the broader uptrend intact. 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 last month’s Japanese Yen Technical Forecast we noted that USD/JPY was testing multi-month range resistance and that , “losses would need to be limited to the monthly open at 144.07 IF price is heading higher on this stretch with a close above 146.15 needed to fuel the next leg.” USD/JPY broke higher that week with the rally extending nearly 5.8% off the June low. The advance exhausted into resistance on the heels of a disappointing NFP report at the 100% extension of the April rally at 150.88 (high registered at 150.92).

USD/JPY plunged 2.8% of the high with price unable to mark a weekly close above the 52-week moving average for the past three-weeks. The bears are attempting to mark a third weekly decline here and the focus is on this pullback into the monthly open. Weekly support rests with the May high-week close (HWC) at 145.63 and is backed by critical support at the yearly low-week close (LWC) / 61.8% retracement of the April rally at 143.68-144.10- both levels of interest for possible downside exhaustion / price inflection IF reached. Note that losses below this zone would threaten the 2021 uptrend and risk another bout of accelerate losses towards the yearly lows / 139.58-149.49.

Initial resistance stands with the 52-week moving average (currently ~148.73) backed by 150.88 and 151.63/95- a region defined by the 61.8% retracement of the yearly range and the 2022 & 2023 highs. A breach / close above this threshold would be needed to mark uptrend resumption towards the next technical consideration at 154.81-155.03.

Bottom line: USD/JPY broke a multi-month consolidation in July with the rally failing at confluent resistance last week- the focus is on this pullback early in the month. From a trading standpoint, losses should be limited to 145.63 IF price is heading higher on this stretch with a close above 151.95 needed to fuel the next major leg of the advance.

Keep in mind the July opening-range has been defined by the first two-days of trade- look for a breakout to offer guidance here. Stay nimble into key U.S. inflation data next week (CPI) and watch the weekly closes. I’ll publish an updated Japanese Yen Short-term Outlook later this week, once we get further clarity on the near-term USD/JPY technical trade levels.

USD/JPY Key Economic Data Releases

Economic Calendar - latest economic developments and upcoming event risk.

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--- Written by Michael Boutros, Sr Technical Strategist

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