Japanese Yen Short-term Outlook: USD/JPY Breakout Looms Ahead of Fed

Japanese Yen Technical Forecast: USD/JPY Short-term Trade Levels

• USD/JPY recovery coils within May range, below 2025 downtrend resistance
• USD/JPY breakout looms heading into Fed interest rate decision tomorrow
• Resistance 146.47, 146.15 (key), 147.25- Support 144.06, 143.05, 142.35 (key)

The U.S. Dollar is poised to mark a third straight daily advance against the Japanese Yen, with USD/JPY rallying more than 1.6%. A consolidation breakout is now in focus as markets await tomorrow’s Federal Reserve interest rate decision. Battle lines drawn on the USD/JPY short-term technical charts.

Japanese Yen Price Chart – USD/JPY Daily

Chart Prepared by Michael Boutros, Sr. Technical Strategist; USD/JPY on TradingView

Technical Outlook: In my last Japanese Yen Short-term Outlook, we noted that USD/JPY had turned from Fibonacci resistance and was, “threatening resumption of the broader downtrend. From a trading standpoint, rallies should be limited to 147.25 IF price is heading lower on this stretch with a close below the monthly range needed to fuel the next leg of the decline.” Price plunged to the range lows into the start of June with the monthly opening-range preserved just above- looking to the breakout for guidance here in the days ahead with the broader downtrend vulnerable while above monthly lows. 

Japanese Yen Price Chart – USD/JPY 240min

Chart Prepared by Michael Boutros, Sr. Technical Strategist; USD/JPY on TradingView

A closer look at Japanese Yen price action shows USD/JPY consolidating within the May range with price continuing to straddle with objective monthly open at 144.06. Initial support rests with the May-open at 143.05 and is backed by the May opening-range low (ORL) at 142.35. Ultimately, a break below the yearly low-day close (LDC) at 141.56 is needed to mark resumption of the broader downtrend towards the first major support zone at the December 2023 low / 61.8% retracement of the 2023 rally at 140.25/49- look for a larger reaction there IF reached.

Resistance is eyed with the June high at 145.47 with a breach / close above the 61.8% retracement at 146.15 needed to suggest a more significant low is in place / a larger trend reversal is underway. Subsequent resistance objectives eyed at the 78.6% retracement at 147.25 and 148.39/65.

Bottom line: USD/JPY is in consolidation above the May lows with the monthly opening-range in view just below downtrend resistance- looking for the breakout. From a trading standpoint, losses would need to be limited to the 143-handle IF price is heading for a breakout on this stretch with a close above 146.15 ultimately needed fuel the next leg of the advance.

The Federal Reserve is expected to hold interest rates tomorrow and the focus will be on the updated economic projections on growth, inflation and employment. Stay nimble into the release and watch the weekly close here for guidance. Review my latest Japanese Yen Weekly Forecast for a closer look at the longer-term USD/JPY technical trade levels.

USD/JPY Key Economic Data Releases

Economic Calendar - latest economic developments and upcoming event risk.

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--- Written by Michael Boutros, Sr Technical Strategist

Follow Michael on X @MBForex