Title: USD/JPY Weekly Outlook: Bullish Momentum Faces Key Resistance Test
Original Source: ActionForex.com
Author: Written by ActionForex.com Technical Analysis Team
URL: https://www.actionforex.com/technical-outlook/usdjpy-outlook/617660-usd-jpy-weekly-outlook-433/
The USD/JPY pair continued to show strong bullish momentum over the past week as the US dollar held firm against the Japanese yen. The pair surged ahead, breaking previous technical resistance levels and testing fresh highs not seen since 1990. However, as the pair tests the limits of its upward trajectory, investors and traders remain cautious, anticipating potential retracements or shifts in market sentiment triggered by fundamental data or central bank policy cues.
Below is a detailed technical overview of the USD/JPY pair for the week, including critical chart levels, momentum shift markers, short-term and long-term perspectives, as well as macroeconomic factors influencing price action.
Weekly Price Review and Momentum Assessment
– The USD/JPY pair rallied strongly last week, surging above the 157 level to close on a firm note.
– The bullish breakout appears to be supported by ongoing divergence in monetary policy between the US Federal Reserve and the Bank of Japan.
– While the Fed remains cautious on cutting rates due to persistent inflation, the Bank of Japan continues extreme accommodative policy, maintaining ultra-low interest rates.
– The pair closed the week near the upper resistance level around 157.70, opening the door for a potential run toward highs not seen in over three decades.
Technically, the near-term bias remains to the upside. The rally from 140.25 (the March 2024 low) remains intact, and bullish momentum is supported by multiple indicators on daily and weekly charts.
Key Technical Levels
– Immediate support lies at 155.75 (near-term pullback area).
– Deeper support is located at 154.53 (38.2% Fibonacci retracement of the March-April rally).
– Resistance is now seen at 157.80 (a psychological level aligned with recent high).
– A sustained break above 157.80 could open the path toward the 160.00 handle.
– Long-term resistance comes into focus at 160.40, the 1990 historical high that has not been tested in over 30 years.
Momentum Indicators
– Daily RSI remains elevated above 70, suggesting that the pair is in overbought territory.
– This can sometimes precede a short-term consolidation or correction.
– MACD on daily and weekly charts shows continued strong bullish divergence, reinforcing the likelihood that uptrend momentum can hold.
– Bullish crossover on the daily MACD has not signaled a reversal, indicating continued upward potential.
Weekly Chart Observations
– The recent price move marks the continuation of a bullish channel, which has defined price action since early 2024.
– Price is trending above the 20-week exponential moving average, which has acted as dynamic support throughout this uptrend.
– The week closed with a bullish candle, featuring little to no upper shadows, which suggests strong buying enthusiasm into the close.
Short-Term Trading Outlook
While the weekly trend supports bullish continuation, short-term traders must be cautious due to potential retracement scenarios stemming from overbought conditions.
Potential scenarios include:
– A mild pullback toward 156.50, forming a higher low to resume upward movement toward 160.
– A deeper decline toward 155.70-154.50 zone, which would test Fibonacci levels and possibly trigger additional buy-on-dip strategies.
Monitor the following:
– Reactions to US inflation reports and employment data.
– Statements from Federal Reserve officials on interest rate trajectory.
– Intervention threats from Japanese policymakers if yen weakness accelerates too quickly.
Medium to Long-Term Outlook
The medium-term trend remains firmly bullish. The breakout above 152.00 earlier in the year confirmed a continuation pattern, following a multi-week consolidation that
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