Japanese Yen Forecast: USD/JPY Poised for Fed, BoJ Breakout

Japanese Yen Technical Forecast: USD/JPY Weekly Trade Levels

• Japanese Yen snaps two-week losing streak– USD/JPY May rally exhausts into June Open
• Monthly opening-range set ahead of US CPI and FOMC / BoJ interest rate decisions
• Resistance 157.31, 158.45, 160.40 – Support 154.79, 153.60, 151.94-152.59

The Japanese Yen is off just 0.46% this week with USD/JPY trading at 156.74 ahead of the US close on Friday. The losses come despite a late-week rebound after a strong US Non-Farm Payrolls report fueled a broad-based rally in the US Dollar. The June opening-range is now set heading into next week’s highly anticipated Fed rate decision. Battle lines 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: We alerted traders to a possible turn in USD/JPY into the June open as price was challenging the May uptrend. A break lower the following day extended nearly 2% off the highs with USD/JPY holding within that two-day range. The focus is on a breakout of this week’s range in the days ahead with key US inflation data and the FOMC interest rate decision & updated economic projections taking center stage on Wednesday. Note that ultimately, we are looking for a breakout of the April 29^th weekly reversal candle (151.86-160.21) for broader guidance here with the long-bias vulnerable while within this range.

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 the monthly opening-range taking shape just below resistance at the objective June open at 157.31. A topside breach / close above this threshold would expose the 2024 high-close at 158.45 and the yearly high / 1990 high at 160.21/40.

Initial support rests with the 50% retracement of the May advance at 154.79 and is backed closely by 153.60- losses should be limited to these levels IF price is heading higher on this stretch. Key support / broader bullish invalidation rests with the 2022 high / 38.2% Fibonacci retracement of the December rally at 151.94-152.59.

Bottom line: USD/JPY has carved the monthly opening-range within a consolidation structure and we’re looking for a possible breakout in the days ahead for near-term guidance. While the technical structure remains constructive, it’s important to note that the threat of BoJ intervention remains high. Remember, their main concern is not necessarily the nominal rate, but the speed of the advance – adjust protective stops accordingly. From a trading standpoint, losses would need to be limited to the weekly lows for the December advance (blue trendline) to remain viable.

US 10yr Treasury Yield – US10Y Weekly

Chart Prepared by Michael Boutros, Technical Strategist; US10Y on TradingView

We noted this key support zone in Monday’s webinar at 4.27/32- a region defined by the 52-week moving average, the 1998 low-close and the 61.8% retracement of the 2000 decline. Yields have already rebounded more than 3.4% off the lows and given the correlation with USD/JPY, we’ll want to keep an eye on this in the week ahead with well-defined monthly opening-ranges now set.

Keep in mind we get the release of the US Consumer Price Index (CPI) ahead of the FOMC & BoJ interest rate decisions. Expect volatility next week as traders begin repricing the possibilities of future Fed cuts here- stay nimble into the releases and watch the weekly close 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.

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