USD/JPY outlook: Japanese yen extends gains, hits the highest in over six months

USD/JPY

USDJPY accelerated lower at the start of the week (down over 1% in Asian / early European trading on Monday), attempting to resume a sharp fall of last week, which made a brief pause on Friday.

Japanese yen was lifted from its multi-decade lows by the first intervention in late July and received fresh boost by strong hawkish shift in BoJ’s rhetoric which signals rate hike in September policy meeting (most of economists expect 25 basis points hike but 50 basis points increase is also in play) as well as change in traders’ sentiment favoring further yen longs.

Today’s violation of key 155.20 support zone (lows of Aug 3 / Sep 3,4), generates negative signal of bearish continuation on completion of bearish failure swing pattern on daily chart, with break below 154.78 (Fibo 38.2% of 139.88/163.98 uptrend) to validate signal and expose targets at 152.00 zone Jan 25 trough / 50% retracement) and 150.92 (27 July 2025 spike high).

Daily studies are in full bearish configuration (with the latest formation of 10/200DMA death cross) but oversold, that may provide headwinds, along with significant support provided by the top of rising and thick daily cloud (154.26).

Immediate resistances lay at 154.78 (cracked Fibo 38.2%) and 155.20, with stronger upticks to be ideally capped under 156.50/75 zone, to keep larger bears intact and provide better selling levels.

Res: 159.17; 159.35; 159.59; 160.00.
Sup: 154.05; 153.06; 152.26; 151.93.