Japanese Yen Forecast: USD/JPY Rally Vulnerable into Monthly Cross

Japanese Yen Technical Forecast: USD/JPY Weekly / Daily Trade Levels

USD/JPY poised to mark fifth weekly advance- up for six-of-the-past seven weeks
USD/JPY bulls testing technical resistance- BoJ, US PCE / NFPs on tap into monthly cross
Resistance 153.02/40 (key), 154.89, 157.16- Support 151.51/94, 148.73-149.60 (key), 146.42/65

The US Dollar surged nearly 9.7% against the Japanese Yen since the September/ yearly lows in USD/JPY, with the rally attempting to mark a fifth consecutive-weekly advance. The bulls are now testing a key technical hurdle and we’re looking for a reaction off this mark into the monthly cross with major event risk on tap into the close of the week. Battle lines drawn on the USD/JPY weekly & daily technical charts.

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, “a reversal off key support at the yearly lows in USD/JPY is now testing a major pivot zone into downtrend resistance... losses should be limited to the October open IF price is heading higher on this stretch with a close above the 75% parallel needed to fuel the next major leg.” The zone in focus was 148.73-149.60- a region defined by the 2022 high-close and the 2023 high-week close (HWC).

Price spent nearly three-weeks grinding into this region before breaking out with the October advance extending nearly 7.2%. The rally is testing Fibonacci resistance this week and the risk rises for possible topside exhaustion / price inflection into the close of the month.

Japanese Yen Price Chart – USD/JPY Daily

Chart Prepared by Michael Boutros, Sr. Technical Strategist; USD/JPY on TradingView

A closer look at the daily chart shows USD/JPY trading within the confines of an ascending pitchfork extending off the September lows with the 75% parallel capping the rally for the last two-days. The focus is on key resistance here at the May low-day close (LDC) / 61.8% retracement of the yearly range at 153.02/40. Note that the daily momentum is signaling bearish divergence into these highs and we’re looking for a reaction off this mark in the coming days.

Initial support rests with the 200-day moving average / 2022 high 151.51/94 – note that the median-line converges on this zone into the start of November and a break / close below would risk a larger correction within the multi-month uptrend. Medium-term bullish invalidation now raised to 148.73-149.60 with a break / close below the February LDC / August low-week close (LWC) at 146.42/65 ultimately needed to put the bears back in control.

A topside breach / weekly close above this key pivot zone would be needed to mark uptrend resumption / validate a breakout of the broader July downtrend. Subsequent resistance objectives eyed at the June LDC at 154.89, the 78.6% retracement at 157.16 and the April high-close at 158.45- both regions of interest for possible topside exhaustion / price inflection IF reached.

Bottom line: The USD/JPY rally is testing technical resistance this week and while near-term outlook remains constructive, the immediate advance may be vulnerable into this threshold. From a trading standpoint, a good zone to reduce long-exposure / raise protective stops- losses should be limited to the 200 DMA IF Price is heading for a breakout with a close above 153.40 needed to mark uptrend resumption.

Keep in mind there is major event risk ahead with the Bank of Japan (BoJ) interest rate decision, US Core Personal Consumption Expenditure, and Non-Farm Payrolls on tap into the monthly cross. Stay nimble in the November open and watch the weekly closes here for guidance.

USD/JPY Key Economic Data Releases

Economic Calendar - latest economic developments and upcoming event risk.

Active Weekly Technical Charts

--- Written by Michael Boutros, Sr Technical Strategist

Follow Michael on X @MBForex

From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.

City Index is a trading name of StoneX Financial Pty Ltd.

The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.

While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.

StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment further CFD investors do not own or have any rights to the underlying assets.

It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.cityindex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.cityindex.com/en-au/terms-and-policies/.

StoneX Financial Pty Ltd, Suite 28.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.