Japanese Yen Forecast: USD/JPY Eyes Breakout From Support Range

Japanese Yen Technical Forecast: USD/JPY Weekly Trade Levels

• USD/JPY rebounds off support into September open- rally fails at yearly moving average
• USD/JPY range breakout pending- ADP employment, Non-Farm Payrolls on tap
• Resistance ~148.90, 150.88, 151.63/95 (key)- Support 146.10/70, 143.67-144.10 (key), 139.58-140.49

The Japanese Yen remains on the defensive this week, with USD/JPY building on a rebound off support into the monthly open. The advance takes price into the yearly moving average and the immediate focus is on a breakout of this week’s range for guidance in the days ahead. Battle lines drawn on the USD/JPY weekly technical chart.

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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 the USD/JPY breakout was testing confluent resistance and that, “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.” USD/JPY has been rangebound for the past five-weeks with price holding just below the 52-week moving average (currently ~148.90). We’re looking for a breakout of this week’s range for guidance in the days ahead.

Weekly support rests with the June high-close / 38.2% retracement of the April advance at 146.10/70- note that the 2021 trendline converges on this threshold over the next few weeks and further highlights the technical significance of this key threshold. Ultimately, a break / close below the 61.8% retracement / 2025 low-week close (LWC) at 143.68-144.10 is needed to invalidate a multi-year uptrend in USD/JPY. Such a scenario would expose the next major technical consideration at 139.58-140.49- a region defined by the December 2023, 2024 & 2025 lows and the 61.8% retracement of the 2023 advance.

A topside breach / weekly close above the yearly moving average exposes the 100% extension of the April advance at 150.88 and the 61.8% retracement / 2022 & 2023 highs at 151.63/95- look for a larger reaction there IF reached. Ultimately a breach / close above the upper parallel / November high-close at 155 is needed to mark resumption of the broader multi-year uptrend.

Bottom line: USD/JPY pulled back into support last month with price holding just above multi-year uptrend support. 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.

Keep in mind we get the release of the ADP employment report tomorrow with the more encompassing Non-Farm Payrolls report on tap Friday. Stay nimble into the releases and watch the weekly closes here for guidance. I’ll publish an updated Japanese Yen Short-term Outlook once we get further clarity on the near-term USD/JPY technical trade levels.

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--- Written by Michael Boutros, Sr Technical Strategist

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