Japanese Yen Short-term Outlook: USD/JPY Bulls Retreat

Japanese Yen Technical Forecast: USD/JPY Short-term Trade Levels

• USD/JPY poised to mark largest single-day/week loss since November- validates break of September uptrend
• Threat for further losses with close below 200DMA- support in view ahead of NFP
• Resistance 153.71, 155.21 (key), 156.27- Support 151.51/95 (key), 150.71, 149.60

The U.S. Dollar is now poised to mark a fourth consecutive-weekly decline against the Japanese Yen with USD/JPY down nearly 4.3% from the January highs. The decline invalidates a multi-month uptrend with the first major technical hurdle already in view. Battle lines drawn on the USD/JPY short-term technical charts heading into Non-Farm Payrolls.

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, “A break of the January opening-range threatens a deeper pullback within the multi-month advance. From a trading standpoint, losses should be limited to the 200-day moving average IF price is heading higher on this stretch…” USD/JPY has dopped another 2.7% since then with a break and retest of slope support invalidating the September uptrend.

Today’s decline has already extended nearly 1.3% with USD/JPY now attempting to mark a close below the 200-day moving average for the first time since December. Initial support is now in view and the immediate focus is on a reaction into this threshold IF reached with the near-term outlook weighted to the downside while below objective monthly open.

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 within the confines of a descending pitchfork extending off the yearly high with price attempting to break below the median-line / 200-day moving average today. Initial resistance is now eyed back to the January swing low at 153.71 and I backed by the February open at 155.21. Note that the upper parallel converges on this threshold over the next few days and a breach / close above would be needed to invalidate the January downtrend. Ultimately, a weekly close above the November high-close at 156.27 would be needed to threaten uptrend resumption.

Initial support rests at 151.51/95- a region defined by the 38.2% retracement of the September rally and the 2022 & 2023 swing highs. Ultimately, a break below the 100% extension at 150.71 would be needed to suggest a more significant high was registered last month / a larger reversal is underway. Subsequent support seen at the 2023 high-week close (HWC) at 149.60 and the 2022 high-close at 148.74.

Bottom line: A break of the September uptrend takes USD/JPY towards the first major technical hurdle. From at trading standpoint, look to reduce portions of short-exposure / lower protective stops on a test of Fibonacci support- rallies should be limited to the monthly open IF price is heading lower on this stretch with a close below 151.50 needed to fuel the next leg lower in price.

Keep in mind we are in the early throws of the February opening-range with U.S. Non-Farm Payrolls on tap Friday. Stay nimble here 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