Japanese Yen Forecast: USD/JPY Bears Assume Control as Uptrend Cracks

Japanese Yen Technical Forecast: USD/JPY Weekly Trade Levels

• USD/JPY reversal breaks September uptrend – four-week decline testing yearly moving average
• USD/JPY threat for deeper setback into trend support- Fed testimony, U.S. inflation data on tap
• Resistance 151.95-152.50, 155.03, 157.70-158.45 (key)- Support 148.74, 146.95 (key), 143.90

The Japanese Yen is poised to snap a four-week rally against the US Dollar with last week’s sell-off in USD/JPY marking the largest single-week decline since November. The immediate focus is on a reaction around the yearly moving average and although the medium-term threat remains lower, the bears may be vulnerable to some kickback here. Battle lines drawn on the USD/JPY weekly technical chart.

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 had reversed off uptrend resistance with price approaching initial support at, “the November high-close near the 155-handle. Note that basic channel support converges on this level over the next few weeks and a break below this slope is needed to suggest a more significant high was registered last week / a larger reversal is underway.”

The bears sat at support for three-weeks before finally breaking lower with USD/JPY extending a full 5% off the yearly high last week. The immediate focus is on this key pivot zone around 151.95-152.50- a region defined by the 2022 / 2023 highs and the 52-week moving average. A close below this threshold last week leaves the trade vulnerable with subsequent weekly support objectives seen at the 2022 high at 148.74 and the 61.8% Fibonacci retracement of the September rally at 146.95- both levels of interest for possible downside exhaustion / price inflection IF reached.

A close back above the yearly moving average would expose resistance at the November high close at 155.03 with critical resistance steady at the April high-close / 2025 high-week close (HWC) at 157.70-158.45- look for a larger reaction there IF reached. Ultimately, a breach / close above the 2020 parallel is needed to fuel the next major leg of the advance towards the 2024 high / HWC at 160.73-161.95.

Bottom line: USD/JPY reversed off long-term technical resistance last month with the recent decline breaking below the September uptrend. The immediate focus is on this week’s close with respect to 151.95-152.50. From a trading standpoint, rallies should be limited to 155 IF price is heading lower on this stretch with a break of the lows needed to fuel the next leg of the decline.

Keep in mind Federal Reserve Chair Powell will begin his two-day testimony before congress today with key U.S. inflation data on tap this week. Stay nimble onto the releases and watch the weekly close for guidance here. 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

Economic Calendar - latest economic developments and upcoming event risk.

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--- Written by Michael Boutros, Sr Technical Strategist

Follow Michael on X @MBForex