**USD/JPY Weekly Outlook: June 24–28, 2024**
*Originally authored by ActionForex.com, summarized and expanded for in-depth Forex analysis.*
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As we approach the final week of June 2024, USD/JPY remains a key focal point for traders and investors globally. The currency pair has been trading within a range that reflects underlying economic divergences between the United States and Japan. The dollar continues to leverage US economic resilience and interest rate ideas, while the yen faces persistent pressure from ultra-loose monetary settings and direct intervention threats from Japanese authorities.
This week’s analysis explores:
– An overview of recent price action and technical landscape
– Fundamental factors driving the pair
– Key levels and scenarios to watch
– The outlook for the coming week and broader implications
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### Price Action Overview and Technical Analysis
USD/JPY has been in an uptrend for much of 2024, propelled by both fundamental and technical factors. Last week, the pair briefly tested resistance at 159.00 but failed to hold above, as market participants remained wary of potential intervention by Japanese authorities. The pair closed the week near 158.70, consolidating but still within striking distance of year-to-date highs.
**Key technical observations:**
– **Trend:** The pair remains firmly above its 50-day and 200-day moving averages, indicating strong bullish momentum over the medium and long term.
– **Support levels:** The first immediate support is at 156.70, an area previously tested after sharp downside corrections triggered by rumors or comments regarding potential intervention.
– **Resistance levels:** The primary resistance resides around 160.20–160.30, a psychological level that has repeatedly capped attempts at a breakout. Additional resistance is found at 161.85, a multi-year high from earlier in 2024.
– **Momentum indicators:** The Relative Strength Index (RSI) is hovering just below the overbought territory at 66 on the daily chart, indicating caution for extended longs, but not yet signaling a confirmed reversal.
**Weekly technical chart takeaways:**
– USD/JPY posted another bullish candlestick on the weekly chart, albeit with a moderate upper wick reflecting rejection above 159.00.
– No substantial bearish reversal patterns are present, but the pair’s reluctance to cleanly break and hold new highs leaves it vulnerable to sudden drops should intervention materialize.
– Weekly MACD stays positive, supporting broader bullish sentiment.
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### Fundamental Drivers
#### US Dollar Factors
**Economic performance:**
The US economy continues to outperform most advanced economies, with robust employment figures and positive retail spending numbers. This persistent economic strength lends broad support to the US dollar.
**Monetary policy:**
The Federal Reserve’s June decision to leave rates unchanged was widely expected. However, Fed communications have strongly emphasized caution about rate cuts, citing sticky inflation and resilient growth. According to the latest Fed dot plot, only one reduction is likely in the second half of 2024, compared to initial expectations of three cuts. This narrative supports the dollar by keeping yield spreads in its favor.
#### Japanese Yen Factors
**Bank of Japan stance:**
The Bank of Japan (BoJ) continues to set itself apart among major central banks with its ultra-easy monetary stance. While it marginally adjusted its policy earlier in the year, the BoJ has stopped short of moving significantly away from negative or near-zero rates. Recent BoJ communications suggest that policy normalization will be slow, possibly extending into 2025.
**Japanese intervention:**
A major theme for USD/JPY traders is the specter of direct currency intervention by Japanese authorities, who have repeatedly stated their concern at yen weakness. The Ministry of Finance conducted aggressive interventions in late April and early May, successfully bringing the pair lower temporarily. However, persistent divergence in monetary stance has seen the pair gradually reclaim those losses.
#### Yield Differentials
US Treasury yields remain well above their Japanese counterparts. The 10
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