US Dollar Forecast: USD/JPY Rally Persists After Defending Weekly Low

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By :  ,  Strategist

US Dollar Outlook: USD/JPY

USD/JPY climbs to a fresh weekly high (146.25) even as the US Personal Consumption Expenditure (PCE) Price Index unexpectedly holds steady in July, and the exchange rate may stage a larger recovery as it carves a series of higher highs and lows.

US Dollar Forecast: USD/JPY Rally Persists After Defending Weekly Low

USD/JPY rallies for the third day after defending the weekly low (143.45), and the exchange rate may attempt to retrace the decline from the monthly high (150.89) as the Relative Strength Index (RSI) continues to recover from oversold territory.

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However, USD/JPY may track the August range ahead of the Federal Reserve interest rate decision on September 18 as the central bank is widely expected to adjust its policy, and the fresh forecasts from Chairman Jerome Powell and Co. may influence foreign exchange markets as the central bank is slated to release the update Summary of Economic Projections (SEP).

USD/JPY Price Chart – Daily

USDJPY Daily Chart 08302024 Chart Prepared by David Song, Strategist; USD/JPY on TradingView

  • USD/JPY may stage a larger recovery as it climbs back above the 145.30 (78.6% Fibonacci retracement) to 145.90 (50% Fibonacci extension) region but need a break/close above 148.90 (61.8% Fibonacci retracement) to bring 150.30 (61.8% Fibonacci extension) 150.30 (61.8% Fibonacci extension) back on the radar.
  • A breach above the monthly high (150.89) opens up the 151.40 (50% Fibonacci retracement) to 151.95 (2022 high) area, with the next hurdle coming in around 153.90 (38.2% Fibonacci retracement).
  • At the same time, failure to hold above the 145.30 (78.6% Fibonacci retracement) to 145.90 (50% Fibonacci extension) region may push USD/JPY back towards the monthly low (141.69), with a break/close below 141.50 (38.2% Fibonacci extension) raising the scope for a test of the January low (142.22).

Additional Market Outlooks

Canadian Dollar Forecast: USD/CAD Rebound Emerges Ahead of March Low

GBP/USD Pullback Brings RSI Back from Overbought Zone

AUD/USD Vulnerable amid Struggle to Test January High

Euro Forecast: EUR/USD Preserves Advance Following Fed Symposium

--- Written by David Song, Strategist

Follow on Twitter at @DavidJSong

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