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.

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 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.

Active Short-term Technical Charts

— Written by Michael Boutros, Sr Technical Strategist

Follow Michael on X @MBForex

The EUR/USD is our featured currency pair this week, owing to the fact we have the European Central Bank’s key rate decision and important inflation data from the US coming in a week before the Federal Reserve’s own decision on interest rates. Ahead of these macro events, the EUR/USD forecast remains modestly bearish, although the currency pair has found some love today thanks to optimism about more stimulus measures being introduced in China, one of the Eurozone’s major exports destinations.

What is driving the markets today?

China’s government announced they will embrace a “moderately loose” strategy next year, in a sign of greater easing ahead that has been hailed by investors hungry for more stimulus today. The news caused Chinese equities and nearly all Chinese-linked assets rally, from copper to commodity stocks in the FTSE. The euro also found some mild support on the view that a stimulus-driven recovery in China will help support eurozone exports into that region. But most of the gains were evidenced in currencies that have even closer trade ties with China, such as the AUD. All eyes are now on the Central Economic Work Conference due to start on Wednesday, for signals of more fiscal support from China.

How big of a cut should we expect from the ECB?

Well, analysts are expecting a standard 25 basis point rate cut at Thursday’s meeting of the Governing Council of the European Central Bank. There were talks of perhaps 50 basis points, which may still be under consideration. However, the ECB is more likely, in our view, to deliver a 25bp cut to take the deposit rate down to 3.15% from the current 3.40% and use the press conference to open the door to several further rate cuts in 2025. Today’s release of the latest Sentix Investor Confidence reading will certainly make the ECB’s doves more vocal. It is not just data that calls for looser policy: Governments in Paris and Berlin both collapsed over budget talks recently and this uncertainty is likely to weigh on growth further. The EUR/USD forecast could turn more bearish if the ECB turns out to be even more dovish than the market is expecting them to be right now.

EUR/USD forecast: CPI is this week’s key US data

US inflation data will be released this week, with CPI coming on Wednesday and PPI a day later. CPI is expected to rise to 2.7% y/y from 2.6% y/y previously. This will be the last set of key data before the Federal Reserve meets next week. Following Trump’s victory in the presidential election race, investors have sharply reduced their expectations about further US interest rate cuts in 2025. The upcoming December rate decision is unlikely to be impacted by this CPI report, unless we see a super-hot print. But whether the Fed will go ahead with a cut at its initial 2025 meetings will be influenced, among other key data highlights, by this CPI report, although it is employment that the Fed is now more focused on.

But after Friday’s somewhat of a softish NFP report, a 25-bps rate cut is now more likely than not. Indeed, market pricing of a December rate cut has risen to around 87% from 70% last week, although this has not yet had any further influence on the EUR/USD’s direction.

Technical EUR/USD forecast: Key levels to watch

Source: TradingView.com

The EUR/USD has now had a few attempts to break above the 1.06 resistance area (i.e., the 1.0595-1.0610 range). So far, it has failed to post a daily close above this range to tip the balance in the bulls’ favour. But will that change as we head deeper into the week remains to be seen. For now, at least, the bulls will need to remain patient as we don’t have a concrete reversal signal to work with. A daily close above this resistance area could potentially pave the way for a short-squeeze rally towards the 1.0700 area, possibly 1.0775/80.

But while the 1.06 resistance area holds, the risks remain skewed to the downside. As such a break below the 1.0500 area is still a scenario that looks more likely than a sharp rally. The 1.0500 level is the most important support to watch in so far as the short-term outlook is concerned. A daily close below the 1.0450-1.0500 area could see the EUR/USD resume its bearish trend that started back in September. If that happens, then the next downside target would be the liquidity resting below the recent lows of around 1.0333 area. Thereafter, you have the round handles like 1.0300 and 1.0200 as the subsequent targets en route to potentially parity.

All told, the EUR/USD forecast is modestly bearish, and we could see the selling resume unless US CPI is super soft, or the ECB is not as dovish as markets are expecting.

— Written by Fawad Razaqzada, Market Analyst

Follow Fawad on Twitter @Trader_F_R

• Cable slides 0.17%, unable to sustain gains against a strengthening US Dollar Index, now at 106.36.
• GBP/USD’s failure to surpass the 200-day SMA at 1.2820 signals potential for further pullback.
• Downward pressure increases, with possible support targets at 1.2600 and the November 22 low of 1.2486.

The Pound Sterling tumbled after failing to clear the 1.2800 figure for the third consecutive day, trading at 1.2720, down over 0.17% daily. Cable erased its earlier minuscule gains amid a session characterized by US Dollar strength, with the US Dollar Index (DXY) up over 0.19%, at 106.36.

GBP/USD Price Forecast: Technical outlook

The GBP/USD consolidates as it recovers from falling to multi-month lows at around 1.2480s. On its way north, the pair cleared the 1.2600 figure and November 29 peak of 1.2749 before aiming toward the December 6 high at 1.2811. The failure to extend its gains past the 200-day Simple Moving Average (SMA) of 1.2820 opened the door for a pullback to current spot prices.

On the other hand, sellers are moving in, as shown by the Relative Strength Index (RSI) punching below its neutral line, indicating that they’re gathering steam. If GBP/USD drops below 1.2700, the pair could slide towards 1.2600 before challenging the November 22 swing low of 1.2486.

GBP/USD Price Chart – Daily

Key Events

• US CPI: Week’s catalyst for broader market volatility on Wednesday
• Federal Reserve and BOJ Rate Decisions: Anticipated rate adjustments could shake markets.
• Holiday Rallies: Potential delays in traditional Christmas rallies until 2025

USDJPY

As detailed in my previous article, USDJPY, Silver Forecast: Bullish Rebounds in Question, several bullish indicators emerged on Friday as USDJPY tested the 148.60 support level. This coincided with positive technical setups and market sentiment leaning towards a BOJ rate hike after the Fed’s expected rate cut in mid-December. Volatility risks remain on the horizon with US inflation data.

US Indices: Are There Any New Highs for 2024?

US indices started the year strong, recording successive highs before capping 2024 with December’s anticipated Santa Claus rally and New Year effect. This aligns with bullish momentum for Trump’s presidency.
Despite these highs, the Dow Jones faces bearish correction pressures from the 45,000 zone, driven by inflationary concerns, geopolitical instability, and profit-taking ahead of the holidays. As markets brace for 2025, the combination of these risks and uncertainties under Trump’s leadership sets the stage for volatility.

Technical Analysis: Quantifying Uncertainty

USDJPY Forecast: Weekly Time Frame – Log Scale

Source: Tradingview

USDJPY is still holding a bullish rebound from the key support at 148.60. The bullish indicators supporting the setup are:

• The 3-day RSI rebounding from the neutral zone and moving average
• Price action holding above the 20-period SMA following the November drop
• The 150-mark continuing to serve as psychological support

If the 148.60 low holds firm, the next resistance is at 153.30, aligning with the lower boundary of the long-term trendline connecting consecutive lows from January 2023 to 2024. Longer-term resistance levels include 155, 157 and 160, reflecting significant Yen weakness and potential BOJ intervention risks. From the downside, the next level to watch at 146.80 in the event of further downside. Deeper declines could retest levels 144 and 140.

Dow Analysis: Daily Time Frame – Log Scale

Source: Tradingview

For a longer-term technical analysis of the Dow chart, the details are published in the following article EURUSD, Dow Forecast: On Edge Ahead of Key US Data

On the daily time frame, the Dow is consolidating near the 45,000 level, forming another top amid overbought RSI conditions and negative divergence. The psychological implications of the 45,000 mark and its Fibonacci extension reinforce the significance of this zone.
The 4H RSI reflects a rebound potential, aligning with recorded highs at 44,300 in November.

Upside momentum could resume with a firm close above 45,200, eyeing resistance at 47,000. Conversely, a break below 44,280 could extend retracement towards 43,300, 42,200, and 41,500.

Nasdaq Analysis: 3Day Time Frame – Log Scale

Source: Tradingview

As previously mentioned in EURUSD, Nasdaq Forecast: Inflation Data and Holiday Volatility, Nasdaq fell short of the 2,700-mark on Monday following momentum slowdowns in the Dow and S&P ahead of the US CPI and FOMC meeting.
The 4H RSI, displayed on the daily chart, reflects a retest of the neutral zone as the price tests 21,400 support.

Further upside can be confirmed with a close above 21,800, eyeing resistance at 22,800. A break below 21,280 could deepen corrections to 21,140, 20,800, and 20,300, aligning with the bottom border of the primary uptrend since October 2022 lows.

— Written by Razan Hilal, CMT on X:@Rh_waves and Forex.com Youtube

Created on December 10, 2024

• Investor risk aversion has returned due to recent developments in the Middle East, which is positive for the US dollar’s gains.
• Accordingly, the EUR/USD pair has returned to the vicinity of the important support level of 1.0500, quickly giving up the gains of the previous weekend that reached the resistance level of 1.0630 following the announcement of strong US jobs data.

Will the Euro-Dollar Rise in the Coming Days?

According to reliable currency trading company platforms, the selling of the Euro has developed into a sideways trend, and the chart also shows the boundaries of the narrow sideways range that has developed since mid-November. Overall, we believe that the coming days may see the Euro-Dollar retest the upper bound of the range at 1.0628. However, a daily close above this level would be a bullish development for those who want a stronger Euro. In general, the EUR/USD pair still needs to trade decisively above 1.06 (and even above 1.0660) to convincingly stop the current downtrend. However, the current rebound above 1.0550 provides at least an additional barrier for the Euro.

Therefore, the technical picture is one of resilience rather than strength. It seems that the markets are tired of buying the US dollar but are not confident enough to buy the Euro directly. Also, the movement of forex prices in recent days indicates the limits of what is called “Trump trading”. In addition, the fact that US interest rates and US Treasury yields remain near recent lows is a major headwind for the US dollar.

The Euro is Concerned with ECB Decisions

The main event for the Euro against other major currencies this week will be the European Central Bank’s decision, where a further interest rate cut is expected. Consensus expects a 25-basis point cut, although market pricing shows that some expect a stronger 50 basis point move. If the latter is implemented, the Euro will weaken. Therefore, the EUR/USD pair will test the bottom of the recent range towards support at 1.0450.

Although there is a strong argument for the ECB to accelerate the pace of policy easing by delivering a 50-basis point cut, it seems that a majority of the Governing Council members prefer 25-basis points, which would lower the deposit rate to 3.0%. Nevertheless, the policy statement will indicate that with downside risks clearly increasing, monetary policy could turn to a more neutral stance before long. We still believe that the ECB will cut the deposit rate further than investors expect next year. At the same time, the “dovish” message issued by the ECB will also be consistent with a weaker Euro exchange rate.

However, not all roads lead to weakening the Euro, and some analysts believe that the ECB will want to show caution, which could strengthen the currency.

Trading Tips:

We still prefer to sell the Euro Dollar from every upside level as the factors of weakness in the Euro are strong and may take time to remove or the opposite may happen, and things will get worse. Cautiously, attentions are turning cautiously to the European Central Bank announcement and US inflation figures.

EUR/USD Analysis Today:

The EUR/USD pair continues to be in a neutral position within an ascending triangle pattern, as the price formed higher lows and found resistance at the key psychological level of 1.0600. At the same time, the upper part of the triangle keeps the gains under control again, pushing the EUR/USD pair closer to the bottom around the secondary psychological level of 1.0550, which also coincides with the dynamic support at the moving averages. In terms of simple moving averages, the 100-day simple moving average appears to be crossing above the 200-day simple moving average, indicating that the trend is bullish or that support is likely to hold rather than break. Stronger upward momentum could stimulate a move above the triangle’s peak and a rise equal to the formation’s height, which extends about 250 pips.

At the same time, the Stochastic indicator is in the oversold zone, indicating exhaustion among the bears, so a shift upwards means that buyers are ready to take control of performance. Also, the oscillator has a large space to rise before reaching the overbought zone, so the price can continue to follow the same approach. Technically, the Relative Strength Index has more room to decline before reaching the oversold zone, so downward pressure may remain for a little longer. Ultimately, a break below the triangle bottom could lead to a decline equal to the formation’s height as well.

EUR/USD Signals:

You can follow the Euro-Dollar recommendations and other free live trading recommendations exclusively through our website. However, it is necessary to consider not taking risks and activating take-profit and stop-loss orders to ensure the safety of the trading account from any sudden price reversals.

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Created on December 10, 2024

Potential signal:

• if this pair breaks down and closes on a daily chart below the 0.82 level, I am not only short of this pair with a stop loss near the 0.8325 level, but I probably start buying XAU/EUR and selling EUR/USD.
• If this pair falls, I can make a strong argument for dropping to at least 0.78 over the longer term.

• During my daily analysis of cross pairs, the EUR/GBP pair looks particularly interesting.
• This is a market that I think will continue to be very noisy, but I’m watching an area in the form of 0.8250 that I think will continue to be crucial.
• With this being the case, we need to watch whether or not we can break down below there. The reason of course is that if we do, we could hit a massive “air pocket” underneath.

European Union

The European Union has a lot of issues right now, not the least of which can be summed up in one word: France. The French economy looks miserable, and of course there are plenty of political issues in that country as well that leads to instability. This is the biggest problem with a single currency for so many countries, just a handful of them can cause chaos. The fact that France is second only to Germany means that it has and outsized influence on what happens with Europe.

On the other side of the English Channel, we have the United Kingdom which of course isn’t doing as well as United States, but its biggest benefit for traders is that it’s not the European Union. The UK has been doing “okay” for a while, but it certainly has its own issues. However, this is a chart that I’ll be watching very closely because I think this could have massive ramifications across the board.

If the market were to break down below the 0.82 level, then I think the bottom falls out for the euro overall. In that environment, I would expect to see the euro struggle against pretty much anything, and therefore I would be all about Shorty not only this pair, but multiple others. With this, I think a major signal is starting to show itself, now it’s only a matter of whether or not we can see a breakdown. That breakdown could very well happen on Thursday, as the European Central Bank has an interest rate decision, and perhaps more importantly, an accompanying statement.

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• GBP/USD trades near 1.2750 following Monday’s choppy action.
• The near-term technical outlook points to a lack of bullish momentum.
• In the absence of high-impact data releases, risk mood could drive the pair’s action.

GBP/USD rose to 1.2800 on Monday but failed to clear that hurdle for the second consecutive trading day. The pair stays in a consolidation phase at around 1.2750 early Tuesday.

The negative shift seen in risk mood helped the US Dollar (USD) hold its ground in the second half of the day on Monday and caused GBP/USD to erase its daily gains. Wall Street’s main indexes started the week on a bearish note and lost between 0.5% and 0.8% on a daily basis. Early Tuesday, US stock index futures trade mixed.

In the early American session on Tuesday, the US Bureau of Labor Statistics (BLS) will publish a revision to the third-quarter Unit Labor Costs. Markets expect the data to be reaffirmed at 1.9%. In case the BLS revises this figure higher, the immediate market reaction could be USD-positive and weigh on GBP/USD. On the flip side, a negative revision is likely to have the opposite effect on the pair’s action.

Nevertheless, investors could opt to wait for Wednesday’s November Consumer Price Index (CPI) data from the US before taking large positions. Until then, the risk perception could impact the USD’s valuation. If US stocks continue to push lower after the opening bell, the USD could preserve its strength and make it difficult for GBP/USD to attract bulls.

GBP/USD Technical Analysis

In case GBP/USD flips 1.2750 (Fibonacci 50% retracement of the latest downtrend) into resistance, buyers could be discouraged. In this scenario, 1.2700 (Fibonacci 38.2% retracement) could be seen as next support before 1.2660 (100-period SMA).

If GBP/USD stabilizes above 1.2750 and continues to use that level as support, the 200-period Simple Moving Average (SMA) at 1.2770 could act as next resistance before 1.2800 (Fibonacci 61.8% retracement).