USD/JPY Weekly Technical Outlook – Rewritten and Expanded
(Original source: ActionForex.com; Credit to the original author from ActionForex)
Overview of USD/JPY Movement
In the previous week, USD/JPY experienced a notable rejection from the 155 level. Despite attempts to push higher, the pair closed the week in a consolidative range, with weakening bullish momentum suggesting a potential short-term reversal. Market participants are now closely monitoring upcoming U.S. inflation data alongside potential BOJ interventions, which could shape the next directional move. Still, from a macro perspective, the dollar remains strong against the yen, underpinned by widening interest rate differentials and expectations of persistent monetary policy divergence between the U.S. Federal Reserve and the Bank of Japan.
Weekly Performance Summary
– Opening price: Around 154.10
– Weekly high: Approximately 155.00
– Weekly low: Near 152.80
– Weekly close: Around 153.40
– Net weekly change: Slightly bearish bias after initial bullish attempt
– Technical theme: Weakening bullish momentum, potential consolidation
Technical Analysis: Daily and Weekly Charts
Daily Chart Insights
– The pair has maintained a generally upward trend over the past several weeks, benefiting from a hawkish Federal Reserve and expectations of monetary policy divergence.
– USD/JPY briefly tested the 155 handle but was rejected by heightened selling pressure and possibly verbal intervention concerns from Japanese authorities.
– RSI on the daily chart has started to curl lower after breaking into overbought territory, suggesting a slowing in bullish momentum.
– MACD histogram remains in positive territory, but the upward slope is moderating, showing divergence between price action and momentum.
Key support levels on the daily chart include:
– 152.80 – Previous horizontal support zone where repeated buying interest has emerged
– 151.90 – Near the 20-day EMA, often providing dynamic support during trends
– 150.85 – Weekly low from early April and a psychologically significant mark
Resistance levels to observe:
– 155.00 – Key resistance zone, now confirmed as a short-term top
– 156.25 – Projected Fibonacci extension level from earlier rallies
– 158.00 – Psychological boundary and potential intervention trigger level
Weekly Chart Analysis
– Long-term weekly candlestick structure reveals that USD/JPY remains in a multi-month uptrend after bottoming out near the 127.20 region in early 2023.
– The upward channel remains intact, with higher highs and higher lows observed in the weekly timeframes.
– However, this week’s rejection near resistance highlights a loss of upward momentum in the near-term.
– Weekly RSI remains constructive but indicates divergence, potentially signaling an upcoming correction or range-bound behavior.
Trend Continuation or Correction?
Primary Uptrend Still Active
– The overall bullish trend, which began in early 2023, remains intact. Supportive fundamentals such as the U.S. 10-year yield above 4.5% bolster USD attractiveness.
– The Federal Reserve’s cautious stance towards cutting interest rates continues to support the greenback against low-yielding counterparts like the yen.
– Despite intervention risks from Japanese authorities, speculators continue to hold long USD/JPY positions based on yield differentials.
Short-Term Correction Risk
– The failure to breach 155 with conviction suggests the presence of technical and possibly macro resistance at or around that level.
– Shorter-term momentum oscillators such as the RSI and stochastic indicators are rolling over, adding to possibilities of a deeper pullback.
– Verbal warnings from Japanese officials have intensified recently, increasing expectations of possible BoJ action should the pair approach 156 or higher.
Potential Scenarios for the Week Ahead
Bullish Scenario
– A break and daily close above 155.00 would indicate resumption of the bullish trend.
– In this scenario, the next target would be the 156.25 Fibonacci extension (projected from the 147.00 to
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