Japanese Yen Outlook: USD/JPY, GBP/JPY, EUR/JPY Price Action Setups

In my weekly analysis of the Commitment of Traders (COT) report, I noted that traders are gradually rebuilding net-long exposure to Japanese yen futures. Asset managers increased net-longs for a third straight week and large speculators for a second, with both groups adding to gross-longs while trimming shorts. After a multi-month decline from record highs, yen positioning is no longer at a sentiment extreme, paving the way for a stronger Japanese yen — and by extension, lower USD/JPY. This view also aligns with my bias that the Federal Reserve will eventually be forced to cut rates while the Bank of Japan (BoJ) edges closer to hikes.

Chart analysis by Matt Simpson - data source: CME, LSEG

That said, this bias is based on the weekly timeframe and specifically versus the US dollar. Yen strength is not yet broad-based across other majors, and daily momentum currently favours currencies like the British pound and euro. This leaves USD/JPY vulnerable to a short-term bounce even as the bigger picture points lower, while GBP/JPY and EUR/JPY may offer more attractive bullish setups until my core view of a stronger yen reasserts itself on the weekly chart.

View related analysis:

Japanese Yen Technical Outlook Across USD/JPY, GBP/JPY, and EUR/JPY

USD/JPY Technical Analysis: US Dollar vs Japanese Yen

USD/JPY price action on the daily chart remains trapped between two key VPOCs (volume point of control) at 146.53 and 148.50. The broader bias favours a downside break while prices hold beneath 149, but with USD/JPY currently near the range lows, a short-term upswing within the range looks more likely.

Bulls may look for minor dips towards the 146.50–146.80 zone, targeting a rebound to the 148 handle before watching for signs of a swing high that could reset the move lower. A decisive break beneath 146.50 would be a bonus for Japanese yen bulls and USD/JPY bears, opening the way toward 144 support.

Chart analysis by Matt Simpson - data source: TradingView USD/JPY

EUR/JPY Technical Analysis: Euro vs Japanese Yen

The euro gained on Monday after the final revision of the S&P manufacturing PMI showed expansion for the first time since mid-2022. EUR/USD extended its rally for a third day, EUR/CHF posted a bullish engulfing candle, and EUR/JPY appears set to push higher after rebounding from mid-August lows.

On the daily chart, EUR/JPY found firm support at the 171 level, forming a double bottom above that zone and bouncing from its 50-day SMA. A cluster of dojis last week, followed by Monday’s strong bullish range expansion, suggests the correction from the 173 handle may be complete.

The 1-hour chart highlights a strong uptrend, with a bull flag consolidation pointing to potential continuation. The bias favours a breakout above 172.37, with bulls eyeing a retest of 173 and possibly 174. Pullbacks toward the 172.16 HVN or the 172 handle may offer dip-buying opportunities.

Chart analysis by Matt Simpson - data source: TradingView EUR/JPY

GBP/JPY Technical Analysis: British Pound vs Japanese Yen

A similar setup to EUR/JPY is unfolding on GBP/JPY, though with a key distinction — sterling bulls are attempting to clear a major resistance barrier around the 200 handle. Given the strong bullish trend structure, the bias remains for an eventual breakout.

The rally from the April low to the July high was followed by a healthy correction, which was quickly absorbed by buyers. Momentum has since turned higher after GBP/JPY bounced from the 50-day SMA near 197.85.

Bulls may look to buy dips within Monday’s range to enhance risk–reward potential, targeting a break above 200.00 with scope for further gains if upside momentum accelerates. However, a move below 197.85 would invalidate the near-term bullish bias.

Chart analysis by Matt Simpson - data source: TradingView GBP/JPY

Key Economic Events for Traders (AEST / GMT+10)

03:30 EUR ECB President Lagarde Speaks (EUR/USD, EUR/JPY, DAX)
08:45 NZD Terms of Trade – Export Prices, Export Volume, Import Prices, Terms of Trade Index (Q2) (NZD/USD, AUD/NZD, NZD/JPY)
09:50 JPY Monetary Base (Aug) (USD/JPY, EUR/JPY, Nikkei 225)
11:00 AUD MI Inflation Gauge (Aug) (AUD/USD, AUD/JPY, ASX 200)
11:30 AUD Current Account, Net Exports Contribution (Q2) (AUD/USD, AUD/JPY, ASX 200)
13:35 JPY 10-Year JGB Auction (USD/JPY, EUR/JPY, Nikkei 225)
19:00 EUR Core CPI, CPI, HICP ex Energy & Food (Aug) (EUR/USD, EUR/GBP, DAX)
19:30 EUR German 2-Year Schatz Auction (EUR/USD, EUR/CHF, DAX)
21:30 EUR ECB's Elderson Speaks (EUR/USD, EUR/JPY, DAX)
23:00 SGD S&P Global Manufacturing PMI (Aug) (USD/SGD, EUR/SGD, STI)
23:30 CAD S&P Global Manufacturing PMI (Aug) (USD/CAD, EUR/CAD, CAD/JPY)
23:45 USD S&P Global Manufacturing PMI (Aug) (S&P 500, Nasdaq 100, USD/JPY)

00:00 USD Construction Spending, ISM Manufacturing Employment, ISM Manufacturing New Orders, ISM Manufacturing PMI, ISM Manufacturing Prices, Total Vehicle Sales (Aug) (S&P 500, Nasdaq 100, USD/JPY, Gold, Crude Oil)
00:00 EUR German Buba President Nagel Speaks (EUR/USD, EUR/JPY, DAX)
00:10 USD IBD/TIPP Economic Optimism (Sep) (S&P 500, Nasdaq 100, USD/JPY)
01:00 NZD GlobalDairyTrade Price Index (NZD/USD, AUD/NZD, NZD/JPY)
01:00 USD Milk Auctions (S&P 500, Nasdaq 100, USD/JPY)
01:30 USD 3-Month Bill Auction, 6-Month Bill Auction (S&P 500, Nasdaq 100, USD/JPY, Treasury Markets)
03:00 USD 52-Week Bill Auction, Atlanta Fed GDPNow (Q3) (S&P 500, Nasdaq 100, USD/JPY, Treasury Markets)

View the full economic calendar

-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge

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