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

Article By: ,  Sr. Technical Strategist
September 25, 2024 3:47 PM

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

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