Japanese Yen Forecast: USD/JPY Breakout Eyes Resistance Despite Intervention Threat

Japanese Yen Technical Forecast: USD/JPY Weekly Trade Levels

• USD/JPY has broken above the June range and extended its rally to fresh highs.
• Weekly momentum has reached its strongest level since January, reinforcing the bullish outlook.
• The breakout is now approaching a major resistance zone that could determine the next phase of the advance.
• A sustained break above resistance would expose the next major upside objectives, while failure could trigger a larger pullback within the 2025 uptrend.
• U.S. Non-Farm Payrolls tomorrow may provide the catalyst for the next directional move. Intervention risk remains severe
• Resistance 163.33, 164 (key), 169- Support 161.95, 160.74 (key), 157.70-158

USD/JPY has extended its breakout from the June range, with bullish momentum carrying the pair to fresh multi-month highs despite increasingly vocal intervention warnings from Japanese officials. Weekly momentum continues to strengthen, but the rally is now approaching a major technical resistance zone where buyers will face their next meaningful test. With intervention risks lingering in the background and U.S. Non-Farm Payrolls on tap tomorrow, traders are looking to see whether the breakout can extend or if the advance finally begins to lose steam. Battle lines are drawn on the USD/JPY weekly technical chart heading into NFPs.

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 noted that USD/JPY was approaching pivotal resistance at the yearly high and that from a trading standpoint, “losses would need to be limited to 157.70 IF price is heading higher on this stretch with a close above 160.74 needed to fuel the next major leg of the advance.” USD/JPY held below resistance for more than two-weeks before breaking out mid-June with the subsequent rally extending more than 5% off the May low. Weekly momentum has now reached the highest levels since January with price rallying for seven-of-the-past-eight weeks. Can the bulls maintain this pace? And how much yen weakness are Japanese officials willing to endure before intervening? Tomorrow’s event risk could be the trigger that fuels the next move and from a technical standpoint, the levels are clear.

Weekly resistance is now eyed at the 1.618% extension of the 2025 advance at 163.33 and is backed closely by the 1.618% of the 2026 opening range breakout at 164. Both levels of interest for possible topside exhaustion / price inflection IF reached. A breach / close beyond this mark could fuel another bout of accelerate gains with the next major technical consideration seen at the 1.618% extension of the January advance at 169.

 Look for initial support at the 2024 high near 161.95 backed by the 2024 high-week close (HWC) at 160.74. Losses below this mark would suggest a more significant near-term high is in place and threaten a larger pullback towards uptrend support. Broader bullish invalidation is now raised to the 2025 / January high-week closes (HWC)  and the at 157.70-158.08. Note that the 2025 channel line (red) converges on this zone mid-July.

Bottom line: USD/JPY has broken to fresh highs with a three-week rally approaching initial resistance objectives into the start of the month. From a trading standpoint, look to reduce long exposure / raise protective stops on a rally towards 163.33- losses should be limited to 160.74 IF price is heading higher on this stretch with a close above 164 ultimately needed to fuel the next major leg of the advance.

Keep in mind the intervention threat looms over this trade, and officials could step in at any moment to curb yen weakness. U.S. Non-Farm Payrolls are on tap tomorrow ahead of an extended holiday weekend- stay nimble into the release and watch the weekly close for guidance here. 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.

 

--- Written by Michael Boutros, Senior Technical Strategist

Follow Michael on X @MBForex