USD/JPY Weekly Outlook

USD/JPY broke intervention low of 82.86 to resume recent down trend and reached as low as 81.71 so far. Initial bias remains on the downside this week with 82.55 minor resistance intact. Current fall should now target 61.8% projection of 92.87 to 82.86 from 85.92 at 79.73, which is close to 79.75 low. On the upside, above 82.55 minor resistance will turn intraday bias neutral first. But break of 83.15 resistance is needed to be first signal of bottoming. Otherwise, outlook will remain bearish.

In the bigger picture, the break of 82.86 support indicates that USD/JPY has not bottomed yet. Whole decline from 124.13 is still in progress and should now target 1995 low of 79.75. Also, considering that monthly MACD has crossed below signal line again, suggesting that USD/JPY is rebuilding downside momentum. 79.75 low would probably be taken out. Though, note that Japan could intervene any time to slow of USD/JPY’s fall and hence, the path would likely be very choppy. In any case, break of 85.92 resistance is needed to be the first sign of medium term bottoming while break of 94.97 is needed to confirm reversal. Otherwise, outlook will remain bearish.

In the long term picture, there is no indication of trend reversal yet and USD/JPY’s long term down trend could still extend further to 1995 low of 79.75. We’d anticipate some strong support from 79.75 initially to bring rebound. Focus will be on whether 79.75 would hold or USD/JPY is indeed resuming the multi decade decline that started back in the 80′s.

USD/JPY 4 Hours Chart