Japanese Yen Short-term Outlook: USD/JPY Bears Charge Uptrend Support

Japanese Yen Technical Forecast: USD/JPY Daily / 240min Trade Levels

• USD/JPY marks outside-day reversal off resistance- threatens larger bull market correction
• USD/JPY approaching uptrend support- risk for exhaustion / price inflection ahead
• Resistance 154.89, 156.67 (key), 158.45- Support 153.02/40, 151.88-152.03, 149.60-150.19

The US Dollar is off more than 2.2% against the Japanese Yen since the post-election monthly highs in USD/JPY with price now testing initial trend support. This is the first line of defense for the bulls. Battle lines drawn on the USD/JPY daily & 240min technical charts.

Japanese Yen Price Chart – USD/JPY Daily

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

Technical Outlook: In my last Japanese Yen Technical Forecast we noted that USD/JPY was testing confluent resistance and that the, “immediate advance may be vulnerable into the November open. Ultimately, we’re on the lookout for an exhaustion low in the weeks ahead. From trading standpoint, losses should be limited to 148.73 for the September uptrend to remain viable with a breach / close above 153.40 needed to fuel the next leg in price.”

USD/JPY fell nearly 1.7% off the October high with price registering an intraday low at 151.09 before mounting an outside-day reversal post-US election. A rally of more than 3.6% failed at the 76.4% retracement on Friday at 156.67 with USD/JPY marking another outside-day reversal. The pullback is testing support today at former resistance- looking for possible inflection off this zone in the coming days.

Japanese Yen Price Chart – USD/JPY 240min

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

A closer look at USD/JPY price action shows the weekly opening-range taking shape just above support at 153.02/40- a region defined by the May low-day close (LDC) and the 61.8% retracement of the yearly range. Note that the median-line converges on this threshold over the next few days and a break / close below this slope would threaten a larger correction within the September uptrend.

Subsequent support objectives eyed at the 200-day moving average / 2022 & 2023 highs / November open at ~151.88-152.02 with bullish invalidation now raised to the 2023 high-week close (HWC) / 38.2% retracement at 149.60-150.19- losses below this threshold would suggest a more significant high was registered last week / a larger trend reversal is underway.

Initial resistance is eyed at the June LDC with a breach / close above 156.67 needed to mark uptrend resumption. Subsequent resistance objectives eyed at the April high-close at 158.45 and the upper parallel / 1990 high near 160.40- look for a larger reaction there IF reached.

Bottom line: USD/JPY exhausted into uptrend resistance last week with the pullback now testing median-line support- looking for a reaction here. From a trading standpoint, a good zone to reduce short-exposure / lower protective stops - the immediate focus is on a breakout of the weekly opening-range for guidance with the near-term threat lower while below 155. Ultimately, losses should be limited to the 200DMA IF price is heading higher on this stretch with a close above 156.67 needed to mark uptrend resumption.

Keep in mind we have key inflation data on tap into the close of the month from the US and Japan. 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.

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