Japanese Yen Technical Forecast: USD/JPY Short-term Trade Levels

• USD/JPY breaks January opening-range lows- threatens deeper correction within September uptrend
• USD/JPY support in view ahead of Trump Inauguration, BoJ rate decision
• Resistance 156.26, 157.19, 157.89-158.45 (key)- Support 154.34, 152.80s (key), 151.50/95

The US Dollar was down more than 1.7% against the Japanese Yen at the lows off the week with USD/JPY threatening a break of a multi-week range. The immediate focus is on this pullback with multi-month uptrend support in view ahead of the extended holiday break. Battle lines drawn on the USD/JPY short-term technical charts heading into the Presidential Inauguration and the BoJ next week.

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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 a rebound off technical support in USD/JPY was, “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.”

USD/JPY broke through resistance the following day with the rally extending nearly 6.9% off the December lows into key resistance at 157.89-158.45. A break of the January opening-range yesterday has already fallen more than 2.4% off the monthly high and the immediate focus is on this pullback towards uptrend support.

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 proposed descending pitchfork extending off the monthly high with price bounding off the median-line into the close of the week. Initial resistance is being tested now at the November high-close around 156.26 with near-term bearish invalidation set to the objective monthly / yearly open at 157.19. Ultimately, a breach /close above 158.45 is needed to mark uptrend resumption / fuel the next major leg of the advance towards the April high at 160.21.

Initial support rests with the November high-day close (HDC) / 23.6% retracement of the September advance at 154.32/34 and is backed by the lower parallel / 200-day moving average around 152.80s- both levels of interest for possible downside exhaustion / price inflection IF reached. Ultimately, a break / close below the 38.2% retracement / 2022 & 2023 highs at 151.50/95 would be needed to suggest a more significant high was registered last week / a lager trend reversal is underway.

Bottom line: A break of the January opening-range threatens a deeper pullback within the multi-month advance. From a trading standpoint, losses should be limited to the 200-day moving average IF price is heading higher on this stretch with a breach / close above 158.45 needed to fuel the next major leg of the advance.

Keep in mind we are heading into an extended holiday weekend with the inauguration of President Trump and the Bank of Japan (BoJ) interest rate decision on tap next week. Stay nimble here and watch the weekly closes 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.

Active Short-term Technical Charts

— Written by Michael Boutros, Sr Technical Strategist

Follow Michael on X @MBForex

While the major indices rallied, FX markets were fairly contained in the first half of Friday’s session, with the EUR/USD trading flat around the 1.03 handle. Other euro crosses were all higher as risk appetite improved further with some of the major European indices such as the German DAX and UK’s FTSE 100 hitting new record highs. The improvement in sentiment has been driven this week by a sharp drop in global bond yields, owing to weaker-than-expected inflation data from both the US and UK. We also had some surprisingly strong Chinese data overnight, which helped to reduce fears about China’s economy. What’s more, the ceasefire in Gaza has also helped to soothe investor concerns. But with Trump set to take office on Monday, we could see the return of heightened volatility again. After all, he has promised implementing drastic policies from day one. So, the short-term EUR/USD forecast is subject to increased risks from Trump’s unexpected

Trump inauguration and PBOC rate decision (Monday)

The People’s Bank of China will set the 1- and 5-year Loan Prime Rate (LPR) hours before Donald Trump officially takes office. This is a benchmark lending rate to influence short-term interest rates as part of its monetary policy strategy. After months of sub-par growth, and negative inflation, China has been stuck in a deflationary environment. Throughout last year, the PBOC and China’s government were quite busy unleashing various stimulus measures to revive the economy. Judging by the latest data released overnight, it seems like efforts paid some dividends. GDP grew 5.4% in the final quarter of 2024 compared to a year earlier, exceeding analysts’ expectations and marking the fastest pace of growth in 6 quarters. Industrial production and retail sales also beat. The key takeaway point is that China met its growth objective. But with Trump’s return, we could see Chinese exports suffer amid raised tariffs in the coming months and so volatility could return to markets. However, at this meeting, the PBOC may decide against increasing its stimulus measures, and keep rates on hold. But it may still surprise given the ongoing slump in the stock market, yuan and its bond yields.

Global PMIs could impact EUR/USD forecast

The PMI data will be released on Friday, January 24, from around the world. Perhaps most important to the EUR/USD forecast will be those from the Eurozone. Global growth concerns have been among factors behind the softness in some of the major currencies such as the euro, pound and yuan. The Purchasing Manager’s Indices are leading indicators of economic health. The rationale is that businesses react quickly to market conditions, and their purchasing managers hold some of the most current insights into the company’s view of the economy. Therefore, if we see some improvement, it should at least help to relief some selling pressure on the single currency.

EUR/USD technical analysis

Source: TradingView.com

The near-term technical EUR/USD forecast remains tilted to the downside. The question remains whether the pair will test and possibly break below the parity (1.000) level in the coming weeks. So far, the 1.0200 level has provided decent support.

Meanwhile, in terms of resistance levels to watch, 1.0300-1.0340 now marks a key resistance zone. This area had previously served as support, so we may see some pressure come back into the market from around this zone. The bearish trend line comes in just above this zone, too. While below these levels, the path of least resistance on the EUR/USD remains to the downside. A potential break above here would be a bullish development – we will cross that bridge if and when we get there.

— Written by Fawad Razaqzada, Market Analyst

Follow Fawad on Twitter @Trader_F_R

The GBPJPY pair continued to form negative trades since yesterday, to notice approaching the target at 189.30 that forms the key to confirm the continuation of the negativity for the upcoming period.

Note that getting continuous negative momentum by the major indicators will ease the mission to break the current obstacle, to keep our bearish overview to target 188.10 level followed by reaching the major support at 186.90, while breaching 191.40 will postpone the decline and form correctional bullish trades on the near-term and medium-term basis.

The expected trading range for today is between 188.10 and 190.70

Trend forecast: Bearish