Japanese Yen Short-term Outlook: USD/JPY Recovery at Trend Resistance

Japanese Yen Technical Forecast: USD/JPY Daily / 240min Trade Levels

• USD/JPY rebounds off key support into December- Monthly opening-range taking shape
• USD/JPY rally now testing confluent downtrend resistance- risk for exhaustion / price inflection ahead
• Resistance 151.74/99 (key), 153.02/40, 154.34- Support 148.73-149.60 (key), 146.14/65, 144.17/63

The US Dollar is up more than 2.1% off the monthly low against the Japanese Yen with USD/JPY rebounding off key testing support into the December open. The recovery has now extended into technical resistance at the November downtrend with major US inflation data on tap tomorrow. Battle lines drawn on the USD/JPY short-term technical charts.

Japanese Yen Price Chart – USD/JPY Daily

Chart Prepared by Michael Boutros, Sr. Technical Strategist; USD/JPY on TradingView

Technical Outlook: In last month’s Japanese Yen Technical Forecast we noted that USD/JPY was testing the median-line support and that, “the immediate focus is on a breakout of the weekly opening-range for guidance with the near-term threat lower while below 155.” Price broke lower the following week with USD/JPY plunging nearly 5.2% off the November high.

The decline rebounded off confluent support last week at the 2022 weekly high-close / 2023 high-week close (HWC) at 148.73-149.60. The immediate focus is on this recovery with the bulls testing confluent resistance today at 151.74/99- a region defined by the 38.2% retracement of the November decline, the 2022/2023 highs and the 200-day moving average. Looking for a possible reaction off this mark over the next few days.

Japanese Yen Price Chart – USD/JPY 240min

Chart Prepared by Michael Boutros, Sr. Technical Strategist; USD/JPY on TradingView

A closer look at Japanese Yen price action shows USD/JPY trading within the confines of a descending pitchfork extending off the November highs with the upper parallel further highlighting resistance here at 151.74/99. A topside breach would expose the May low-day close (LDC) / 61.8% retracement at 153.02/40 backed by the November high-day reversal close at 154.34- a breach / close above this threshold would be needed to suggest a more significant low was registered last week / a larger trend reversal is underway.

A break below this key support zone would threaten resumption of the November downtrend towards the median-line (currently ~148), with subsequent objectives seen at 146.13/65 and the August low-day close (LDC) / January low-week close (LWC) at 144.17/63- both levels of interest for possible exhaustion / price inflection IF reached.

Bottom line: USD/JPY is rebounding off technical support into the start of the month with the advance now testing the first major resistance hurdle- looking for possible inflection here. From a trading standpoint, the focus is on a breakout of the weekly opening range (149.60-151.99) for guidance with the near-term recovery vulnerable while below the 200-day moving average.

Keep in mind we get the release of key US inflation data tomorrow with the November Consumer Price Index (CPI) on tap. Stay nimble into the release and watch the weekly close here for guidance. Review my latest Japanese Yen Weekly Forecast for a closer look at the longer-term USD/JPY technical trade levels.

USD/JPY Key Economic Data Releases

Economic Calendar - latest economic developments and upcoming event risk.

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--- Written by Michael Boutros, Sr Technical Strategist

Follow Michael on X @MBForex