Japanese Yen Forecast: USD/JPY Bears Extend Yen Rally

Japanese Yen Technical Forecast: USD/JPY Weekly Trade Levels

• Japanese Yen surged nearly 3.4% against US Dollar over the two-weeks
• USD/JPY threatening downtrend resumption- now testing key pivot zone
• Resistance 146.42, 148.73-149.60 (key), 151.95– Support 144.17/63, 141.98, 141.02

The Japanese Yen rallied more than 2% against the US Dollar this week with USD/JPY threatening resumption of the July downtrend. We’re looking for a reaction here in the days ahead with key US inflation data on tap next week. Battle lines are drawn on the USD/JPY weekly & daily technical charts.

Review my latest Weekly Strategy Webinar for an in-depth breakdown of this Yen setup and more. Join live on Monday’s at 8:30am EST.

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 had rebounded off trend support and “rallies should be limited to the monthly open / median-line IF price is heading lower on this stretch with a close below 144.17 needed to mark resumption.” The resistance zone in focus was 148.54-149.60- a region defined by the 61.8% Fibonacci retracement of the December rally, the 2022 high close, and the 2023 high-week close (HWC). USD/JPY registered an intraday high at 149.39 (just 58 pips from the August open) before reversing sharply with price once again attempting to break below the yearly low-week close (LWC) at 144.63- watch the weekly close here.

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 reversing sharply off confluent resistance with the price now within striking distance of initial support at the 2024 low-week close (LWC) / monthly low-day close (LDC) at 144.17/63. A break / daily close below this threshold would be needed mark downtrend resumption with subsequent support objectives eyed at the yearly LDC at 141.98 and the 2024 yearly open at 141.02– both area of interest for possible downside exhaustion / price inflection IF reached. Losses below this lower parallel would threaten a plunge towards the next major support confluence at the March 2023 high-day close (HDC) / swing high at 137.35/91.

Initial resistance eyed at the February LDC at 146.42 with key resistance / near-term bearish invalidation steady at 149.60. Note that a daily close above the median-line would ultimately be needed to suggest a more significant low is in place.

Bottom line: The USD/JPY rebound failed at technical resistance with the pullback now threatening trend resumption near the monthly low-day close. From at standpoint, a good region to reduce portions of short-exposure / lower protective stops- rallies should be limited to 146.42 IF price is heading lower on this stretch with a close below 144.17 needed to fuel the next move.

Keep in mind we get the release of the July Personal Consumption Expenditure (PCE) late next week – stay nimble into the release and watch weekly closes here. We’ll review these charts in-depth in the Weekly Technical Outlook Webinar on Monday.

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 with FOREX.com

Follow Michael on X @MBForex