Japanese Yen Technical Forecast: USD/JPY Weekly / Daily Trade Levels
- USD/JPY surges past the December low with a notable breakout of over 6.1% following the FOMC meeting.
- USD/JPY bulls are actively testing a significant pivot point that coincides with the uptrend resistance, as US Core PCE data is set to be released tomorrow.
- Key resistance levels are identified at 157.16/89, with additional targets around 159.50 and 160.40/73. Support levels are established around 151.90-152, with further critical zones at approximately 151.16 and 148.73-149.60.
The Japanese Yen is on track for its third consecutive weekly decline against the US Dollar, as USD/JPY climbs to new multi-month highs following the Federal Reserve's rate decision. This upward movement leads to a crucial pivot area, and while the long-term perspective remains positive, potential inflection points should be monitored in the upcoming days. The technical landscape on the USD/JPY weekly chart presents significant developments as we approach year-end.
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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 the possibility of a significant correction within the September uptrend of USD/JPY, advising to lower short-exposure or adjust protective stops if approaching the 150 mark. Observations suggested waiting for an exhaustion low ahead of 148 to maintain the viability of the September rally, with a decisive breach above 154.34 essential for resuming upward trends. After a rapid decline of nearly 5.2% from the November highs, USD/JPY posted an intraday low at 148.64 before rebounding.
The US Dollar is now set for a third consecutive weekly increase, having risen 6.1% from the December low on the heels of the FOMC rate decision. This uptrend brings USD/JPY toward a significant resistance level at 157.17/89, characterized by the 78.6% retracement of the yearly range and previous breakdown closing prices from July. Additionally, the convergence of the 2020 parallel with this zone in the coming weeks highlights its technical importance.
Initial weekly support finds itself at the 1986 low / 1998 & 2022 high between 151.90-152, closely backed by the 52-week moving average (currently hovering around 151.16). Broader bullish invalidation is now set at the 2022 high-close and 2023 high-week close (HWC) between 148.73-149.60; a break or close below this area would imply a substantial high is established, leading to a more significant reversal. For the bears to take control, a breach below the 61.8% retracement at 146.29 is necessary.
A decisive break and close above this pivotal area could expose subsequent resistance targets at the upper parallel (blue slope near 159.50) and the 1990 high / 2024 HWC at 160.40/73. Ultimately, to energize the next major leg of the multi-year USD/JPY uptrend, a close above the swing highs at 161.95 is required, with notable reactions expected at these levels if reached.
Bottom line: The USD/JPY rally nears critical technical resistance, with close attention on potential inflections at this threshold. From a trader's perspective, consider reducing long positions and increasing protective stops upon testing 157.16/89; ensure losses are confined to 152 if the price is anticipated to rise, with a close above this pivot zone signaling the resumption of the September uptrend.
Key US inflation data is poised for release tomorrow, with the Consumer Price Expenditure (PCE) expected to demonstrate a slight increase to 2.9% year-over-year for November. Stay adaptable as the release approaches, watching for guidance in the weekly close. Review the latest Japanese Yen Short-term Outlook for a more granular examination of near-term USD/JPY technical levels.
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--- Compiled by Financial Analyst
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