**USD/JPY Weekly Outlook – Analysis by ActionForex.com**
*Adapted and expanded for clarity and depth, with credit to the original author at ActionForex.com.*
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**USD/JPY Weekly Price Action Overview**
The USD/JPY pair exhibited continued resilience last week, managing to stabilize within established ranges despite shifting currents in global risk sentiment and oscillating central bank narratives. While the pair experienced a modest correction early in the week, buyers quickly restored upward momentum as the US dollar rebounded from lows and risk appetite stabilized. The yen, while momentarily lifted by domestic monetary policy headlines and geopolitical caution, ultimately failed to muster sustainable gains, as US Treasury yields bounced and clarity emerged on the Federal Reserve’s policy trajectory.
The week’s price action reflected a tug-of-war between expectations for eventual yen strength—given the Bank of Japan’s (BoJ) shift toward policy normalization—and ongoing US dollar appeal underpinned by robust economic data, persistent inflation concerns, and a cautious Fed. With little significant progress in unwinding the extreme yen weakness of 2022-2023, USD/JPY remains anchored above key technical and psychological zones, setting the stage for critical tests ahead.
**Weekly Technical Outlook – Chart Analysis**
USD/JPY’s technical structure continued to unfold as a complex correction, holding above the medium-term support levels but failing to mount a fresh advance toward the cycle highs. The situation indicates an indecisive market, with technical signals mixed yet pointing toward the likelihood of range trade in the near term.
**Key Technical Points:**
– Daily momentum indicators (RSI, MACD) remain elevated, while short-term moving averages still align positively
– The pair continues to trade above the 55-day EMA, suggesting sustained underlying bid, though upside momentum has cooled
– Stiff resistance emerges at the 160.00 psychological threshold, which coincides with local chart resistance from May’s intervention-driven volatility
– On the downside, near-term support resides at 155.00, with a more serious challenge expected only below 153.60, the pivot from late April
**Price Patterns and Longer-term Structure:**
– A secondary high has been set at 160.20, but the inability to close above the late April spike leaves the pair vulnerable to range trading
– The broader pattern suggests consolidation, with the prior uptrend pausing but not yet reversing
– Significant support and resistance levels are now well-defined, confining trade between 153.60 and 160.20 unless a catalyst emerges
**Fundamental Drivers – Macro and Policy Factors**
USD/JPY’s outlook is being shaped by competing economic and monetary policy developments from the United States and Japan.
**Main Fundamental Influences:**
*1. Federal Reserve Policy:*
– The Federal Reserve continues to tread carefully on monetary policy, with officials adopting a wait-and-see approach as inflation remains stubbornly above target
– Gradual signs of slowing in US economic growth are counterbalanced by a resilient labor market and higher-than-expected CPI prints
– Expectations for Fed rate cuts have been pared back, supporting the dollar and tempering downside in USD/JPY
*2. Bank of Japan Policy:*
– The BoJ confirmed a modest adjustment to its policy stance in April, moving off negative rates for the first time since 2016, but signaling caution about further normalization
– While Governor Kazuo Ueda hints at future steps toward tightening, ongoing concerns about sluggish wage growth and economic fragility have kept further moves on hold
– This measured approach, combined with sporadic intervention threats to curb yen weakness, complicates forecasting and adds two-way volatility to the currency pair
*3. Intervention Risk and Market Sentiment:*
– Japanese authorities have demonstrated willingness to intervene when yen depreciation becomes excessive, as evidenced by the coordinated moves around the 160.00 level earlier this year
– However, credible follow-through and actual intervention remain contingent on both pace and scale of yen declines, limiting the currency’s
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