Japanese Yen Forecast: USD/JPY vs Resistance- Round III

Japanese Yen Technical Forecast: USD/JPY Weekly Trade Levels

Japanese Yen plunges 6.1% vs the US Dollar since the December lows in USD/JPY
USD/JPY trading just below major resistance pivot- January rally remains vulnerable
Resistance 148.73-149.60, 151.90-152, 156 – Support 143.52-144.30, ~142.16, 140.81

The Japanese Yen is virtually unchanged this week with USD/JPY holding just below major technical resistance. Although the Fed interest rate decision and Non-Farm Payrolls did generate a good amount of volatility, the technical structure is unchanged, and the immediate focus is on possible price inflection into this threshold. While the broader outlook is remains constructive, the January rally may still be vulnerable while below this key technical pivot zone. These are the updated targets and invalidation levels that matter on the USD/JPY weekly technical chart.

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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, “plunged nearly 7.7% off the November highs with the immediate focus on this rebound off the 52-week moving average. From a trading standpoint, we’re on the lookout for possible topside exhaustion while below 149.60.” USD/JPY rallied more than 5.5% into the yearly open with price registering an intraweek high at 148.80 before exhausting. The bulls have been unable to mount a meaningful test of this key pivot zone for the last three weeks and while the broader technical outlook is still constructive, the advance remains vulnerable while below this key hurdle.

Initial weekly support rests with the 61.8% Fibonacci retracement of the late-December advance / June high-week close (HWC) at 143.52-144.30 and is backed by the 52-week moving average (currently ~142.16). Key support / broader bullish invalidation resets with the objective yearly open at 140.81.

Key resistance remains at 148.73-149.60- a region defined by the 2022 high-close, the 78.6% retracement of the November decline, and the 2023 high-week close (HWC). A topside breach above this threshold is needed to fuel another test of the 151.90-152 pivot zone (1989, 2022 & 2023 highs and the 1986 low). Look for a larger reaction there IF reached with a breach / weekly close above needed to mark uptrend resumption.

Bottom line: USD/JPY is trading just below major resistance. While the pullbacks over the past two-weeks have been short-lived, the advance remains vulnerable while below this pivot-zone. From a trading standpoint, look to reduce portions of long-exposure / raise protective stops on a stretch towards 149.60- losses should be limited to 143.52 IF price is heading higher on this stretch with a weekly close above needed to fuel the next leg higher in price. 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 with FOREX.com

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