Title: USD/JPY Weekly Technical Outlook – Momentum Points to Further Upside
Source: Adapted from Action Forex, authored by ActionForex.com (https://www.actionforex.com/technical-outlook/usdjpy-outlook/626105-usd-jpy-weekly-outlook-441/)
The USD/JPY currency pair rallied significantly during last week’s trading sessions, breaking past prior resistance levels and indicating continued optimism for the U.S. dollar against the Japanese yen. The weekly chart suggests that bullish momentum is strengthening as the pair continues its uptrend.
This in-depth technical analysis will assess the underlying factors contributing to the current performance of USD/JPY, detail key resistance and support levels, evaluate momentum indicators, and provide insight as to what traders might expect in the short and medium term. This breakdown is based on the original commentary provided by ActionForex.com.
Weekly Overview
– USD/JPY saw a strong rally throughout the week, advancing well above the 157.70 resistance line.
– The bullish move confirms a continuation of the overall upward trend, driven by divergent monetary policy expectations between the Federal Reserve and the Bank of Japan.
– The U.S. dollar generally remained resilient across major pairs, while the yen continued to weaken due to the BoJ’s dovish stance compared to Western central banks focused on controlling inflation.
Trend Continuation Confirmed
– The latest price movement signals a continuation of the broader uptrend that has been in play for much of the past year.
– Breaking through the previous resistance at 157.70 enhances the structural integrity of the bullish formation.
– The rally highlights investor positioning in favor of the dollar as U.S. yields remain elevated on expectations of delayed interest rate cuts by the Fed.
Looking back at historical price action:
– Since forming a local low around 127.20 earlier in 2023, USD/JPY has been pushing higher in an ascending channel formation.
– The break past 157.70 now sets up a potential retest of recent decade highs.
Momentum Indicators
– Weekly MACD (Moving Average Convergence Divergence) continues to show strong bullish signals, having resumed a rising profile.
– The histogram on MACD is increasing in height, reflecting strengthening momentum on the upside.
– RSI (Relative Strength Index) is not yet overbought, which suggests there may be room for upward movement before conditions become extended.
Key Resistance and Support Levels
Resistance:
– The immediate upside target lies at 160.20, which served as a short-term high in recent months.
– A decisive break above 160.20 will pave the way for a test of the multi-year high at 160.32 posted in 2022.
– Beyond that, a sustained breakout would open the door toward 161.80 and possibly 164.00 based on extended Fibonacci levels.
Support:
– On the downside, 157.70 now acts as the first line of support following its role as former resistance.
– Below that, next support lies near the 154.47 level, which marks the low from a prior pullback.
– Firm support may also be found around the 151.85 area where the 55-week EMA currently trends, offering dynamic support.
Analyzing the Daily Timeframe
On the daily chart, USD/JPY maintains a strong bullish outlook:
– The price action has remained consistently above the 20-day and 55-day simple moving averages, both of which are sloping upward.
– Daily RSI is trending just below the overbought zone, suggesting bullish intensity without excessive deviation.
– The upward trajectory is supported by stable economic data in the U.S. and relatively unchanged policy by the BoJ.
Trade Strategy Considerations
Given the current structure of the market, traders may want to consider the following:
Long Opportunities:
– Potential long positions could be considered on minor pullbacks toward 157.70 or 158.00, with stop-loss placement just below 157.00.
– Target levels
Explore this further here: USD/JPY trading.