Based on the article “USD/JPY Weekly Outlook” by ActionForex (source: https://www.actionforex.com/technical-outlook/usdjpy-outlook/616049-usd-jpy-weekly-outlook-431/), the following is a comprehensive and detailed analysis of the weekly outlook on the USD/JPY currency pair. This rewritten version expands on the content and includes additional information and explanations while preserving the insights and technical conclusions of the original author at ActionForex.
USD/JPY Weekly Technical and Fundamental Analysis
The USD/JPY currency pair experienced continued upward momentum last week, extending the broader bullish trend that has been developing over recent months. Despite temporary pullbacks, the pair strengthened its position as market sentiment remained focused on interest rate differentials between the Federal Reserve and the Bank of Japan (BoJ). The weekly closing firmly above key resistance levels highlighted the dominance of bullish forces in the medium term.
Technical Analysis Summary
– The pair opened the week with bullish pressure and managed to reach new multi-decade highs.
– The momentum confirmed ongoing demand for the US dollar, reinforced by diverging monetary policies between the US and Japan.
– Weekly closing levels reflect institutional confidence in sustained upward movement, barring any intervention or unexpected economic surprises.
Key Technical Levels and Indicators
The following are the key support and resistance levels, along with technical indicators that define the medium to long-term trajectory of the USD/JPY currency pair:
Resistance Levels:
– Immediate Resistance: 160.20 – A psychological level recently tested by bulls. If broken, it could open the path to higher multi-decade levels.
– Intermediate Resistance: 162.00 – A projected Fibonacci extension level and historical resistance from the early 1990s.
– Long-Term Resistance: 163.50-165.00 – A large resistance zone reflecting major structural levels from Japan’s economic boom era.
Support Levels:
– Near-Term Support: 156.70 – Last week’s minor low that serves as the first line of defense against pullbacks.
– Intermediate Support: 153.90 – A prior swing high with strong historical buying interest.
– Key Structural Support: 150.80 – A level watched closely by policymakers and the BoJ for signs of excessive yen weakness.
Technical Indicators:
– Moving Averages:
– The pair continues to trade well above both the 50-day and 200-day simple moving averages (SMA), confirming a strong bullish trend.
– The 50-SMA (currently around 152.50) is significantly below current price levels, reflecting long-term bullish momentum.
– Relative Strength Index (RSI):
– RSI on the daily and weekly timeframes is hovering around the overbought zone (above 70).
– While this suggests a risk of pullback, extended overbought conditions are common in trending markets.
– MACD (Moving Average Convergence Divergence):
– Positive and widening MACD histogram supports ongoing bullish momentum.
– The signal line remains well below price action, with no visible signs of bearish crossover.
Trend Outlook
USD/JPY remains clearly in an uptrend both from an immediate and broader perspective. The structure suggests that bulls are in firm control and the trend is aligned with macroeconomic fundamentals. The BoJ’s ongoing accommodative monetary policy and the Fed’s relatively more hawkish stance continue to support upside price action. Unless there is a significant shift in either central bank’s policy stance or coordinated intervention from Japanese officials, the trajectory remains tilted to the upside.
Short-Term Trend:
– Bullish, with strong buying pressure on dips.
– Support near 156.70 is expected to hold during minor corrections.
Medium-Term Trend:
– Strong upward trend supported by fundamentals and technical analysis.
– Expectation of renewed upward momentum toward 162.00 and possibly higher levels.
Long-Term Trend:
– Structure favors an eventual test of historical highs above 165.00, though such movement may require time and supportive macro developments.
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