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Japanese Yen Outlook: USD/JPY Breakdown at Multi-week Low, NFP Levels

Japanese Yen Outlook: USD/JPY Breakdown at Multi-week Low, NFP Levels

Michael Boutros, Strategist

Japanese Yen Technical Price Outlook: Near-term Trade Levels

  • Japanese Yen technical trade levels update – Daily & 120min Charts
  • USD/JPY immediate focus the 2019 low-day close at 106.10
  • Broader outlook vulnerable while below the May open at 107.13

The Japanese Yen is poised to mark the fourth consecutive daily advance against the US Dollar with USD/JPY breaking to fresh seven-week lows in early May trade. The decline is approaching initial support objectives that could interrupt the near-term trend and we’re looking for a reaction down here. These are the updated targets and invalidation levels that matter on the USD/JPY technical price charts. Review my latest Weekly Strategy Webinar for an in-depth breakdown of this Yen trade setup and more.

Japanese Yen Price Chart – USD/JPY Daily

Japanese Yen Price Chart - USD/JPY Daily - Dollar vs Yen Trade Outlook - Technical Forecast

Chart Prepared by Michael Boutros, Technical Strategist; USD/JPY on Tradingview

Technical Forecast: In last month’s Japanese Yen Price Outlook we noted that USD/JPY had, “broken below the April range lows and keeps the focus lower heading into the close of the month. That said, price is now testing initial support objectives that may offer a reprieve to the recent selling pressure.” A brief rebound off those levels into the close of April failed at monthly open / trendline resistance at 107.49 before resuming lower.

The decline is now testing the 2019 low-day close at 106.10 with subsequent support objectives eyed at the median-line of a long-term descending pitchfork formation and the 61.8% retracement of the mid-March rally at 105.20. Daily resistance now 106.92 with near-term bearish invalidation set to the May open at 107.13.

Japanese Yen Price Chart – USD/JPY 120min

Japanese Yen Price Chart - USD/JPY 120min - Dollar vs Yen Trade Outlook - Technical Forecast

Notes: A closer look a Yen price action shows USD/JPY trading within the confines of a near-term descending pitchfork formation with price breaking below the 61.8% extension yesterday at 106.42 (now resistance). The focus remains lower sub-106.92 with subsequent support objectives eyed at the median-line (currently ~105.70s) and 105.20- look for a larger reaction there IF reached with a close below needed to keep the broader focus on the 2019 low / 100% ext at 104.45/59.

For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy

Bottom line: IF this breakdown in USD/JPY is legit, price recoveries should be capped by the upper parallel with a breach above the May open needed to mark reversal. From at trading standpoint, a good spot to reduce short-exposure / lower protective stops. Look for possible topside exhaustion while within this formation with a close below 106.10 needed to fuel the next leg lower in the Dollar. Review my latest Japanese Yen Weekly Price Outlook for a closer look at the longer-term USD/JPY technical trade levels.

Japanese Yen Trader Sentiment – USD/JPY Price Chart

Japanese Yen Trader Sentiment - USD/JPY Price Chart - Dollar vs Yen Trade Outlook - Technical Forecast
  • A summary of IG Client Sentiment shows traders are net-long USD/JPY - the ratio stands at +1.10 (52.33% of traders are long) – neutral reading
  • Long positions are3.41% higher than yesterday and 7.81% higher from last week
  • Short positions are 13.39% higher than yesterday and 26.94% lower from last week
  • We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests USD/JPY prices may continue to fall. Traders are less net-long than yesterday but more net-long from last week and the combination of current positioning and recent changes gives us a further mixed USD/JPY trading bias from a sentiment standpoint.

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Key US / Japan Data Releases

Key US / Japan Data Releases - USD/JPY Economic Calendar - Event Risk

Economic Calendar - latest economic developments and upcoming event risk.

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--- Written by Michael Boutros, Technical Currency Strategist with DailyFX

Follow Michael on Twitter @MBForex

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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