Japanese Yen Technical Analysis: USD/JPY, EUR/JPY, GBP/JPY

Japanese Yen Talking Points:

• USD/JPY is still working on the same Fibonacci support as Monday, but buyers haven’t exactly been able to make a stronger mark on the matter.
• EUR/JPY has continued the recovery from 170.00 after Monday held a higher-low in the pair.
• GBP/JPY has also shown sign of recovery, perhaps less aggressively than EUR/JPY, but there’s a short-term bullish backdrop to work with there for Yen-bears, as well.

Last week was a busy outing for the Yen and USD/JPY in particular, as we had a loaded calendar of US risk to go along with the FOMC rate decision and the BoJ meeting taking place less than 24 hours later.

The overwhelming takeaway from those central bank meetings was USD/JPY strength as the pair broke out to fresh three-month highs, but as I had warned shortly after, chasing breakouts seemed a risky endeavor. The Friday NFP report illustrated that challenge as a massive pullback appeared on the back of the data release. USD/JPY hurriedly pushed through nearby supports and finally found buyers around the 146.95 Fibonacci level on Monday of this week. That held yesterday on a second test but so far, bulls have been unable to re-take control as resistance has built at 147.83. That’s the line in the sand that buyers need to take out to show that they’re on their way back following last Friday’s sell-off.

USD/JPY Daily Price Chart

Chart prepared by James Stanley; data derived from Tradingview

USD/JPY Strategy

With USD already at a fresh near-term low even as USD/JPY is holding above the Monday low, the pair seems less attractive for USD-weakness scenarios. This also illustrates a degree of Yen-weakness but that may be more attractive elsewhere, such as EUR/JPY or perhaps even GBP/JPY.

USD/JPY Four-Hour Chart

Chart prepared by James Stanley; data derived from Tradingview

EUR/JPY

EUR/JPY was in a hard sell-off in the early portion of last week following a bearish engulfing candlestick on Monday. That led to a test of the 170.00 level just ahead of the BoJ, and the reaction to that test was aggressively bullish, although buyers were unable to retain control for long.

Another dip in the pair brought greater question to Yen-weakness scenarios as I had looked at on Monday, but an important test was taking place at the time as the 170.00 level was back in-play. So far, that test has passed for bulls as prices have held a higher-low above last week’s inflection point, and have since pushed both a higher-high and a higher-low. This keeps the door open for bullish continuation scenarios and for traders looking to work with Yen-weakness, this can present a more attractive case given the technical backdrop than what was looked at earlier in USD/JPY.

EUR/JPY Four-Hour Chart

Chart prepared by James Stanley; data derived from Tradingview

GBP/JPY

GBP/JPY has also shown illustration of recovery albeit a bit less attractive than what’s built in EUR/JPY so far. In GBP/JPY, price set a fresh low on Monday while EUR/JPY held that higher-low at the 170.00 test. There has since been a return test of the 196.19-196.42 zone of resistance and that’s come back-in as short-term support, so buyers do have an open door here to make a move. Ideally, support would hold above the 196.10 level that was in as the low for today and the next reference area for resistance is the 197.06-197.22 zone sitting overhead.

GBP/JPY Four-Hour Price Chart

Chart prepared by James Stanley; data derived from Tradingview

--- written by James Stanley, Senior Strategist