Original author: ActionForex.com (Full credit to the original content creator. This is a rewritten summary and expansion based on the original Forex article titled “USD/JPY Weekly Outlook” from ActionForex.com)
Rewritten and Expanded Version:
USD/JPY Weekly Outlook – Bullish Momentum Remains, Key Resistance Levels in Focus
Overview
The USD/JPY pair closed the week on a bullish note, with strong momentum driving the currency pair to new short-term highs. Buyers continue to dominate the pair as the broader market sentiment remains risk-on, broadly supporting the US dollar. Strong US economic data and high yields are further reinforcing the upside for the greenback, while the Japanese yen continues to struggle under persistent monetary easing by the Bank of Japan.
Technical indicators point to further upside in the near term, although investors should be mindful of strong resistance levels that could prompt some consolidation or correction. The week ahead will likely be influenced by upcoming US economic releases, statements from Federal Reserve officials, and yields on US Treasury bonds, all of which will provide directional clues for USD/JPY.
Current Price Action
– The USD/JPY pair closed strongly above the 157.00 mark, confirming bullish control.
– Last week’s price action was characterized by steady upward movement, with minimal pullbacks.
– The pair surged toward 158.00, marking a fresh multi-month high.
– Buyers broke through short-term resistance levels with minimal effort, suggesting continued demand for the greenback.
– The pair now trades within striking distance of the April high near 160.00, the highest level in 34 years.
The resilience of the US dollar and the weakness of the yen remain the core drivers of this pair, as divergent monetary policies and economic fundamentals fuel the trend.
Technical Analysis
Weekly Chart Highlights:
– The rally from the 151.86 low (May correction) has extended strongly.
– Momentum indicators such as MACD and RSI suggest continued bullish bias.
– Weekly RSI remains above 60, confirming strong buyer interest.
– There are no significant bearish divergences at this point.
– The pair is currently trading above the 20- and 50-week moving averages, highlighting solid upward structure.
Support and Resistance Levels:
Key Resistance Levels
– 158.00: Immediate resistance which the pair almost tested at the end of last week
– 160.00: Long-term resistance and psychological level that corresponds to the April high
– 161.80: Fibonacci extension level derived from earlier bullish swings
Key Support Levels
– 156.00: Minor support that aligns with recent breakout levels
– 155.00: Stronger support based on prior price action
– 153.50 and 151.86: Levels marking consolidation zones from early May
– 150.92: Weekly structure support that infers broader trend integrity
Short-Term Analysis Outlook
– On the daily timeframe, price action remains in a defined bullish trend channel.
– RSI on daily is approaching overbought territory, but no reversal signals are present.
– The MACD histogram is rising, with signal lines expanding positively, suggesting the uptrend remains intact.
– The strong bullish candle closes from mid-week last week reflect sustained buying pressure.
– Therefore, the near-term outlook remains positive unless there is a substantial reversal below 156.00.
Market Fundamentals
US Dollar Drivers
– The greenback has gained support from persistent inflation pressures in the US, feeding expectations for sustained high-interest rates.
– The latest Non-Farm Payrolls (NFP) data and stronger-than-expected ISM services index show the US economy remains resilient.
– Federal Reserve officials have maintained a hawkish stance, emphasizing the need to see sustained disinflation before considering rate cuts. This feeds into USD bullishness.
Yen Weakness Factors
– The Bank of Japan continues its ultra-loose monetary policy stance, keeping interest rates near zero.
– Although the BOJ conducted a token rate hike earlier this year, its commitment to
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