Japanese Yen Short-term Outlook: USD/JPY Tests Uptrend Support
USD/JPY plunged nearly 2.7% into the monthly open with price now testing multi-week uptrend support. Battle lines drawn on the short-term technical charts.
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Japanese Yen Technical Forecast: USD/JPY Short-term Trade Levels
- USD/JPY plunges nearly 2.7% into August open- now testing multi-week uptrend support
- USD/JPY weekly range set just above support- U.S. Core PPI, Retail Sales on tap
- Resistance 148.65, 149.28/50 (key), 150.88- Support 146.28/70 (key), 144.10/22, 142.25
USD/JPY plummeted into the monthly open with the post-NFP sell-off now testing the July uptrend. The focus is on whether the bulls can hold the line with the weekly opening-range now set just above slope support. Battle lines drawn on the USD/JPY short-term technical charts.
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 Daily
Chart Prepared by Michael Boutros, Sr. Technical Strategist; USD/JPY on TradingView
Technical Outlook: In last month’s Japanese Yen Short-term Outlook, we noted that USD/JPY was approaching consolidation resistance and that, “losses would need to be limited to 146.15 IF price is heading for a breakout on this stretch with a close above 149.50 ultimately needed to fuel the next major leg of the April advance.” USD/JPY registered an intraday low at 145.86 one week later before surging more than 3.4% into the close of July.
The rally failed at confluent resistance into the August open with the NFP inspired sell-off plunging more than 2.8% off the highs. Price has been riding pitchfork support for the last few days with today’s decline once again testing the July uptrend. The weekly opening-range is set just above this slope- looking for a breakout in the days ahead.
Japanese Yen Price Chart – USD/JPY 240min
Chart Prepared by Michael Boutros, Sr. Technical Strategist; USD/JPY on TradingView
A closer look at Japanese Yen price action shows USD/JPY trading testing slope support in early-US trade- a break below this slope exposes key support at the May swing high / 38.2% retracement of the April advance at 146.28/70- note that a break / close below this threshold would constitute a break of the August opening-range and would suggest a more significant correction is underway. The next major technical consideration rests with the 61.8% retracement / 100% extension of the monthly decline at 144.10/22 and the May low / 78.6% retracement at 142.11/25.
Initial resistance is eyed wit the December low / May high at 148.65 and is backed by 149.28/50- a region defined by the 61.8% retracement of the monthly decline, the 200-day moving average, and the March high-day close (HDC). A breach / close above this threshold is needed to fuel another run at the highs. Subsequent topside objectives eyed at the 100% extension of the April advance at 150.88 and the 61.8% retracement of the yearly decline / 2022 & 2023 highs at 151.63/94.
Bottom line: USD/JPY is testing the July advance here with the weekly range set just above uptrend support- look for the breakout and watch today’s close with respect to this slope. From a trading standpoint, rallies should be limited to 149.50 IF price is heading lower on this stretch with a close below 146.28 needed to fuel the next major leg of the decline.
Keep in mind we get another inflation release tomorrow with U.S. Core PPI on tap ahead of retail sales on Friday. Stay nimble into the releases and watch the weekly closes here for guidance. Review my latest Japanese Yen Weekly Forecast for a closer look at the longer-term USD/JPY technical trade levels.
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--- Written by Michael Boutros, Sr Technical Strategist
Follow Michael on X @MBForex
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