This article is a rewritten version of the original “USD/JPY Weekly Outlook” analysis by ActionForex.com.
USD/JPY Weekly Forecast: Technical Landscape Points to Continuation, but Momentum Signals Mixed Sentiment
Original Author: ActionForex.com
Overview
In the latest market developments, the USD/JPY pair continues to trade with an overall bullish undertone, although momentum indicators depict potential for consolidation in the near term. Last week’s range-bound performance indicates market participants are exercising caution ahead of key economic data and potential central bank policy signals.
Technical settings continue to support the broader upward channel that emerged earlier in the year. However, resistance zones tested multiple times over recent weeks hint at waning bullish momentum, opening the possibility for corrections before any further upside continuation.
Let’s explore the technical configurations, immediate support and resistance zones, and forecast scenarios for USD/JPY on the weekly chart and in broader context.
Weekly Chart Analysis
USD/JPY extended its high-level consolidation last week:
– The currency pair largely traded sideways within a narrow range, lacking follow-through momentum to either direction.
– The key multi-decade high of 160.20, achieved in April, remains untouched, providing a psychological ceiling for further upside.
– Price action throughout the week stayed infrastructure-bound between the 155.50 and 157.70 levels.
– The Bollinger Bands have narrowed significantly, indicating reduced volatility.
– Weekly candlestick formed a small-bodied doji-like structure, signifying market indecision.
– MACD remains in positive territory but exhibits a small bearish divergence, reflecting slowing upside momentum.
– RSI hovers near 58, maintaining a bullish bias but without overbought connotations.
Support and Resistance Levels
In terms of horizontal price zones and dynamic levels, here is the current technical layout:
Immediate Resistance:
– Zone around 157.70–158.00 remains a ceiling. This was last tested at the tail end of May.
– Beyond that, 160.20 represents a strong resistance, being the April high and the highest level since 1990.
– A breakout above 160.20 would open prospects for testing the 162.00–163.00 region next.
Immediate Support:
– Initial support sits around 155.50, the lower bound of the recent sideways range.
– Further below lies the former resistance-turned-support zone of 152.00–153.00.
– A more significant support is located near the 150.80–151.00 area, which was tested multiple times in Q2 and upheld the bullish structure.
Indicators and Oscillators
The technical indicators on the weekly chart help to refine the outlook.
MACD (Moving Average Convergence Divergence):
– Remains in the bullish zone.
– Histogram bars have contracted slightly, signaling that upside momentum is flattening.
– The possibility of a bearish crossover is increasing, but not yet confirmed.
RSI (Relative Strength Index):
– Slightly below 60, indicating a lack of strong directional pressure.
– No sign of divergence or overbought status.
– Confirms that price movement does not currently imply intense demand or distribution.
200-Week EMA and 100-Week EMA:
– Both moving averages continue to trend upwards.
– The distance between current price action and the 200-week EMA underscores the strength of the long-term bullish trend.
– 152.50 (100-week EMA) remains a crucial level to monitor if a retracement deepens.
Fundamental Backdrop
The USD/JPY movement is highly influenced by yield differentials between US and Japanese government bonds, as well as central bank policy expectations.
Key macroeconomic themes weighing on USD/JPY:
– The Federal Reserve remains in a holding pattern regarding interest rates. Markets are pricing in one or two rate cuts for 2024, but timing remains uncertain.
– The Bank of Japan (BoJ), while having moved away from its ultra-loose monetary policy, is still lagging major central banks in terms of
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