Japanese Yen Forecast: USD/JPY Rally Unravels Ahead of Trump

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

• USD/JPY holds technical resistance for a fifth week – falls more than 2.3% off monthly high
• USD/JPY risk for inflection into trend support- Presidential Inauguration / BoJ rate decision on tap
• Resistance 157.89-158.45 (key), 160.40/73, 161.95- Support 155.02, 151.94-152.13 (key), 148.73-149.60

The Japanese Yen rallied more than 0.9% against the U.S. Dollar since the start of the week with USD/JPY pulling back from technical resistance on the heels of yesterday’s CPI print. Support is in view and the focus is on possible price inflection ahead- decision time for the bulls. 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 was, “approaching major technical resistance, and the focus is on possible inflection into this threshold. From a trading standpoint, look to reduce portions of long-exposure / raise protective stops on a test of 157.16/89- losses should be limited to 152 IF price is heading higher on this stretch with a close above this pivot zone needed to mark resumption of the September uptrend.”

USD/JPY registered an intraday high at 158.08 the following week with price holding below uptrend resistance for five consecutive weeks. Key resistance now adjusted to the April high-close / January high at 158.45/88- a breach / weekly close above this threshold is needed to mark uptrend resumption towards subsequent resistance objectives at the 1990 high / 2024 high-week close (HWC) at 160.40/74, and the 2024 swing high at 161.95- look for a larger reaction there IF reached.

Initial weekly support is now in view 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. Subsequent support objectives seen at the 2022 /2023 highs & the 52-week moving average at 151.95-152.13 and the 2022 high-close / 2023 HWC at 148.74-149.360- both levels of interest for possible downside exhaustion / price inflection IF reached.  

Bottom line: USD/JPY turned from long-term uptrend resistance this week with the price now approaching initial trend support. From a trading standpoint, losses should be limited to channel support IF price is heading higher on this stretch with a close above 158.88 needed to mark uptrend resumption.

Keep in mind we are heading into an extended holiday weekend with the inauguration of President Trump and the Bank of Japan (BoJ) interest rate decision on tap next week. Stay nimble here into support and watch the weekly closes for guidance. I’ll publish an updated Japanese Yen Short-term Outlook once we get further clarity on the near-term USD/JPY technical trade levels.

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--- Written by Michael Boutros, Sr Technical Strategist

Follow Michael on X @MBForex