Japanese Yen Technical Forecast: USD/JPY Recovery Faces First Test

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

USD/JPY marks outside weekly reversal off key support- rallies more than 3.6% off yearly low
Rebound now testing initial technical hurdles- weekly opening-range breakout imminent
Resistance 143.92-144.63, 146.20/65 (key), 148.73-149.60– Support 142, 140.25-141.02 (key), 137.24/91

The Japanese Yen is virtually unchanged since the start of the week with USD/JPY trading within a tight range on the heels of last week’s reversal. A rebound off downtrend support has rallied more than 3.6% and takes price into the first technical pivot zone. Battle lines drawn on the USD/JPY weekly & daily technical charts into the close of the month.

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 USD/JPY had, “plunged into a major technical support confluence and the focus is on a reaction off this pivotal zone. From a trading standpoint, a good region to reduce short-exposure / lower protective stops – rallies would need to be limited to 144.63 IF price is heading lower on this stretch with a close below 140.25 needed to fuel the next major leg.” The support zone in focus was at 140.25-141.02- a region defined by the December swing low, the 61.8% Fibonacci retracement of the 2023 advance and the objective 2024 yearly open.

USD/JPY briefly registered an intraday low at 139.58 the following week before reversing sharply higher with price marking an outside weekly-reversal off key support at fresh yearly lows. A rally of more than 3.6% is now testing initial resistance and the focus remains on inflection off this key pivot zone 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 rebounding off confluent support at the lower parallel of this descending pitchfork formation we’ve been tracking since July. The recovery is now testing initial resistance at the August close-low / January low-week close (LWC) at 143.91-144.63- looking for a reaction off this mark.

A topside breach / close above this zone exposes a more significant resistance confluence at the objective September open / February low-day close (LDC) / August LWC at 146.20/65- note that the median-line converges on this threshold into the October-open and a weekly close above would be needed to suggest a more significant low was registered this month / a larger recovery is underway. Subsequent resistance objectives are eyed at the 2022 weekly high-close / 2023 HWC at 148.73-149.60 and the 2022 high at 151.94.

A break / close below key support at 140.25-141.02 is needed to mark downtrend resumption with such a scenario exposing subsequent objectives at 137.24/91- a region defined by the 2023 March high-day close (HDC), July low, and the March high. Look for a larger reaction there IF reached.

Bottom line: A rebound off downtrend support takes USD/JPY into initial resistance – risk for some price inflection here into the close of the month. The immediate focus is on a breakout of the weekly opening-range. From a trading standpoint, a good zone to reduce portions of long-exposure / raise protective stops – losses should be limited to the 142-handle IF price is heading higher on this stretch with a close above 144.63 needed to fuel to fuel the next leg.

Keep in mind we get the release of the August Core Personal Consumption Expenditure (PCE) on Friday with US Non-farm Payrolls on tap next week. Stay nimble into the monthly cross and watch the weekly closes here for guidance.

USD/JPY Key Economic Data Releases

--- Written by Michael Boutros, Sr Technical Strategist

Follow Michael on X @MBForex

This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

StoneX Financial Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.cityindex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.

ALL TRADING INVOLVES RISKS. LOSSES CAN EXCEED DEPOSITS.

City Index is a trading name of StoneX Financial Pte. Ltd. (“SFP”) for the offering of dealing services in Contracts for Differences (“CFD”). SFP holds a Capital Markets Services Licence issued by the Monetary Authority of Singapore for Dealing in Exchange-Traded Derivatives Contracts, Over-the-Counter Derivatives Contracts, and Spot Foreign Exchange Contracts for the Purposes of Leveraged Foreign Exchange Trading. SFP is also both Derivatives Trading and Clearing member of the Singapore Exchange (“SGX”). SFP is a wholly-owned subsidiary of StoneX Group Inc.

The information provided herein is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to invest, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk.

The information does not represent an offer of, or solicitation for, a transaction in any investment product. Any views and opinions expressed may be changed without an update. To understand the risks and costs involved, please visit the section captioned “Important Information” and the “Risk Disclosure Statement”.

The information herein is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.

StoneX Financial Pte. Ltd. 1 Raffles Place, #18-61, One Raffles Place Tower 2, Singapore 048616. Tel: 6309 1000. Co. Reg. No.: 201130598R.

This advertisement has not been reviewed by the Monetary Authority of Singapore.