Japanese Yen Technical Forecast: USD/JPY Weekly / Daily Trade Levels

• USD/JPY post-FOMC breakout extends more than 6.1% off December low
• USD/JPY bulls testing major pivot zone at uptrend resistance- US Core PCE on tap tomorrow
• Resistance 157.16/89 (key), ~159.50s, 160.40/73- Support 151.90-152, ~151.16, 148.73-149.60 (key)

The Japanese Yen is poised to mark a third consecutive weekly decline against the US Dollar with USD/JPY surging to fresh multi-month highs on the back of the Fed rate decision. The rally takes price into a critical pivot zone and while the broader outlook remains constructive, we’re looking for possible inflection here in the days ahead. Battle lines drawn on the USD/JPY weekly technical chart into the close of the year.

Review my latest Weekly Strategy Webinar for an in-depth breakdown of this Yen setup and more. Join live on Monday’s at 8:30am EST.

Japanese Yen Price Chart – USD/JPY Weekly

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

Technical Outlook: In last month’s Japanese Yen Technical Forecast we highlighted potential for a larger correction within the September uptrend in USD/JPY while noting that, “From a trading standpoint, look to reduce short-exposure / lower protective stops on a stretch towards 150 IF reached. Ultimately, we are looking for an exhaustion low ahead of 148 for the September rally to remain viable with a breach / close above 154.34 needed to mark uptrend resumption.” Price plunged nearly 5.2% off the November highs with USD/JPY registering an intraday low at 148.64 into the monthly open before rebounding.

The US Dollar is now poised to mark a third consecutive weekly advance with the recovery extending more than 6.1% off the December low on the heels of the FOMC rate decision. The rally takes USD/JPY towards a major resistance hurdle just higher at 157.17/89– a region defined by the 78.6% retracement of the yearly range and the July breakdown close. Note that the 2020 parallel converges on this zone over the next few weeks and further highlight the technical significance of this threshold.

Initial weekly support now rests back at the 1986 low / 1998 & 2022 high at 151.90-152 and is backed closely by the 52-week moving average (currently ~151.16). Broader bullish invalidation now raised to the 2022 high-close / 2023 high-week close (HWC) at 148.73-149.60– a break / close below this threshold would suggest a more significant high is in place / a larger reversal is underway. Ultimately, a break below the 61.8% retracement at 146.29 would be needed to put the bears in control.

A topside breach / close above this key pivot zone exposes subsequent resistance objectives at the upper parallel (blue slope near 159.50s) and the 1990 high / 2024 HWC at 160.40/73. Ultimately, a close above the swing highs at 161.95 would be needed to fuel the next major leg of the multi-year uptrend in USD/JPY (look for a larger reaction there IF reached).

Bottom line: The USD/JPY rally is now approaching major technical resistance, and the focus is on possible inflection into this threshold. From a trading standpoint, look to reduce portions of long-exposure / raise protective stops on a test of 157.16/89- losses should be limited to 152 IF price is heading higher on this stretch with a close above this pivot zone needed to mark resumption of the September uptrend.

Keep in mind we get the release of key US inflation data tomorrow with the Consumer Price Expenditure (PCE) expected to show a slight uptick to 2.9% y/y in November. Stay nimble into the release watch the weekly close here for guidance. Review my latest Japanese Yen Short-term Outlook for a closer look at the near-term USD/JPY technical trade levels.

USD/JPY Key Economic Data Releases

Economic Calendar – latest economic developments and upcoming event risk.

Active Weekly Technical Charts

— Written by Michael Boutros, Sr Technical Strategist

Follow Michael on X @MBForex

Created on December 19, 2024

• The EUR/USD pair has plummeted to a support level of 1.0343, the lowest for the currency pair since November 2022, before stabilizing around 1.0385 at the time of writing this analysis.
• The performance confirms the strength of the trading strategy that we recommended to our clients which was to sell EUR/USD from every upward level.
• Selling of EUR/USD increased after the US Federal Reserve hinted that it would be more hawkish in 2025.
• As we previously predicted, the bank would be wary of Trump’s policies, which typically raise inflation rates in the country.

The US Federal Reserve Cuts Rates but Doesn’t Promise More

According to economic calendar data, the US Federal Reserve cut the federal funds rate by 25 basis points as expected but indicated only 50 basis points of rate cuts for 2025, which is half the cut expected in September. At the same time, the European Central Bank has already cut its main deposit rate four times this year and maintained a cautious stance on further easing. However, many analysts believe that the ECB may need to accelerate policy easing to support the weak Eurozone economy. This disparity was enough to increase EUR/USD selling, and after its recent losses, expectations for the currency pair to move towards parity have strengthened.

The Eurozone Economy Continues to Suffer Economically and Politically

Confirming this, preliminary Purchasing Managers’ Indexes for both manufacturing and services pointed to another, albeit slower, contraction in private sector activity, with Germany and France continuing to perform poorly. Also, Annual inflation rose less than expected to 2.2% from the initial estimate of 2.3%. Adding to the euro’s problems is political uncertainty. In this regard, in Germany, the chancellor lost a vote of confidence in parliament as expected. In France, the new government faces significant challenges, including passing the 2025 budget.

Trading Tips:

The pressure on the euro is strong and may continue for some time, so any rebound upwards may be opportunities to sell the euro again this week, which will be fateful for the euro’s closures in 2024

The Future of Germany’s Exit from the European Union

The leader of the second strongest party in opinion polls in Germany told Bloomberg television in Berlin: “What we need is free trade between European countries, but we don’t need all the bureaucracy.” She has “destroyed the socialist policymaking” in the European Union and “destroyed the market mechanism in Europe.” Alice Weidel, the candidate for chancellor from the far-right Alternative for Germany party, has criticized the European Union for destroying the country’s auto industry and proposed returning the bloc to a free trade area.

In its program for the early elections on February 23, the Alternative for Germany party calls for Germany’s exit from the European Union and the Eurozone. Obviously, this would represent a major shift in German politics and break decades of political and economic integration.

EUR/USD Analysis Today:

According to the performance on the daily chart above, the EUR/USD pair is still in its broader downward trend, and the current move towards the support level of 1.0350 will strengthen expectations for the future of parity between the euro and the dollar in the near future. Especially, as the economic and political problems of the Eurozone countries have worsened. The recent losses of the euro and dollar have pushed some technical indicators to oversold levels, led by the Relative Strength Index (RSI) and the MACD. Meanwhile, currency investors may not care as much about this as they focus on the continued weakness of the currency pair. Currently, the closest support levels for EUR/USD are 1.0330, 1.0250, and 1.0180, respectively. Finally, we still expect any gains for the EUR/USD to be subject to a rapid collapse.

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