Japanese Yen Technical Forecast: USD/JPY Weekly Trade Levels
- USD/JPY has climbed for five of the past six sessions after rebounding sharply just ahead of long-term support, reversing a sharp decline from the highs.
- Bulls eye major resistance at an area that has repeatedly limited upside progress.
- Key even risk: Japanese snap elections Sunday- US NFPs, CPI on tap next week.
- Resistance 157.70-158.08, 158.88 (key), 160.74-161.95- Support 154.79, 154.10, 151.91/98 (key)
USD/JPY has mounted a sharp rebound following a steep selloff, recovering from key structural support defined by prior multi-year swing highs and major retracement levels. The snap-back rally has been swift, carrying price back toward a critical resistance zone that has repeatedly capped upside attempts in recent months. While the broader uptrend remains intact for now, the market is once again confronting a decisive technical hurdle. How price responds here will be important in determining whether this recovery evolves into a renewed advance or proves to be a corrective rebound before downside pressure resumes. Battle lines are drawn on the USD/JPY weekly technical chart.
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 was “trading just below resistance into the start of the year, and the focus is on possible inflection off this threshold in the days ahead… From trading standpoint, losses would need to be limited to 155 IF price is heading higher on this stretch with a close above 158.88 needed to fuel the next major leg of the advance.” Prices broke higher in the following weeks and despite numerous attempts to break the 2025 highs, the bulls were unable to secure a close above 158.88.
The subsequent selloff extending more than 4.6% off the highs with USD/JPY rebounding just pips ahead of key support last week at the 2022 & 2023 swing highs and the 38.2% retracement of the April advance 151.91/98. A recovery of nearly 3.5% off the low is now within striking distance of resistance at 157.70-158.08- a region defined by the 2025 high-week close (HWC), the December high-close, and the January HWC. Look for a reaction there IF reached with a breach / close above 158.88 needed to mark resumption of the 2025 uptrend. The next major technical consideration is eyed at the 2024 HWC and the 2024 swing high at 160.74-161.95.
Monthly open support rests at 157.79 and is backed by the 61.8% retracement of the most recent advance at 154.10. Broader bullish invalidation remains at 151.91/98, and a break / weekly close below this threshold would be needed to suggest a more significant high is in place and a larger trend reversal is underway.
Bottom line: A reversal off uptrend resistance last month has rebounded just ahead of uptrend support. From a trading standpoint, losses should be limited to 154 IF price is heading higher on this stretch with a close above 158.88 still needed to fuel the next major leg of the rally.
Keep in mind, snap elections in Japan this weekend will be central focus and may fuel added volatility in USD/JPY into the Sunday open. Consensus estimates are calling for a landslide result with betting markets pricing a 99% chance Prime Minister Takaichi will secure the win. A decisive victory could amplify expectations for further expansion in fiscal policy and spur further yen weakness (USD/JPY higher). Note that US Non-Farm Payrolls are also slated for next week with key inflation data (CPI) on tap Friday. Stay nimble into the weekly open and watch the closes her 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.
--- Written by Michael Boutros, Senior Technical Strategist
Follow Michael on X @MBForex
