Japanese Yen Technical Forecast: USD/JPY Weekly Trade Levels
- USD/JPY USD/JPY has rallied more than 5% from the February low, pushing to fresh yearly highs before stalling just below the 160 level.
- Price is now trading within last week’s range, with momentum divergence suggesting the advance may be losing strength- breakout to offer guidance.
- Major event risk next week with Japan CPI and US retail sales, ADP & NFPs on tap
- Resistance 160, 160.73, 161.95 (key)- Support 157.70, 156.67, 154.79-155.07(key)
USD/JPY has pushed higher in recent weeks, reclaiming ground steadily and approaching a key psychological level near 160. The rally has been strong, but price is now consolidating beneath this threshold after failing to extend gains into fresh yearly highs. With momentum showing early signs of strain and the pair holding within a defined range, the market is approaching a critical decision point. A decisive break above this level would reinforce the bullish trend, while failure to follow through could trigger a period of consolidation or a deeper pullback. 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 into, “resistance into the close of the week / month, and the focus is on a possible inflection off this zone in the days ahead. From a trading standpoint, losses should be limited to 154.79 IF price is heading higher on this stretch with a close above 156.67 needed to fuel another run towards the yearly highs.” Resistance broke the following week with USD/JPY extending more than 5% off the February lows to a fresh yearly high. The advance stalled just ahead of the 160-handle with building momentum divergence suggests the advance may be vulnerable. Price continues to trade within last week’s range- look for the breakout to offer near-term guidance here.
A topside breach exposes topside resistance objectives at the 2024 high-week close (HWC) at 160.74 backed closely by the 2024 swing high at 161.95. Note that the channel resistance converges on this threshold this week – look for a larger reaction there IF reached. Subsequent resistance is eyed at the 1.618% extension of the 2025 advance at 163.33.
Initial weekly support rests with the 2025 HWC at 157.70 and is backed by the objective yearly open at 156.67. Key support and broader bullish invalidation rests with the yearly low-week close (LWC) and the 61.8% retracement of the February rally at 154.79-155.08. 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: USD/JPY is attempting to secure a breakout of the yearly opening-range highs, and the focus is on this push towards 160. From a trading standpoint, losses should be limited to 157.70 IF price is heading higher on this stretch with a break of the monthly highs needed to fuel the next leg of the advance.
Keep in mind we get the release of Japan CPI early next week with US ADP employment, retail sales, and Non-Farm Payrolls on tap into the monthly cross. Markets have now discounted any rate cuts this year with Fed fund futures now reflecting a 40% probability the central bank may hike rates by October. With concerns that higher energy prices will bleed into inflation continuing to mount, the employment data will be critical in determining the Federal Reserve’s next move and a weaker-than-expected print on employment could weigh on expectations for higher rates later this year. In the meantime, sentiment will be largely driven by development in the Middle East with regards to the Iran war. Keep your eyes on the headlines and watch the weekly close here for guidance. Review my latest Japanese Yen Short-term Outlook for a closer look at 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
