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

Japanese Yen Talking Points:

• USD/JPY rallied to start the week but has since recoiled back towards support. The pair has been very range bound for more than a month now.
• EUR/JPY has re-tested the prior high and GBP/JPY is vying for a breakout from the 200.00 psychological level at the time of video and article production.
• I’ll be looking into all three markets during tomorrow’s webinar and you’re welcome to join. Click here to register.

The US Dollar has been weak since the NFP release in early-August, which was on the heels of the currency’s strongest monthly outing in more than three years. But, in USD/JPY, that weakness hasn’t been very noticeable over the past month and change as the pair has continued to meander in a fairly well-defined range.

Last week saw buyers try to push a breakout although they failed at the 200-day moving average, and this week started with another push up to resistance only to see sellers swat the pair back down towards support.

As we move into an important CPI print later in the week, there could be a justifiable case for a bullish bias, given that short-term high last week along with a recent hold of higher-lows. But the deduction of Yen-weakness against a USD that’s been weak in many other FX markets highlights the fact that there may be more attractive venues to work with a falling JPY.

For range traders, however, USD/JPY can remain of interest, as there’s been multiple holds of support in the 146.94-147.14 zone, to go along with resistance at 147.94-148.13, followed by 148.51 and then another zone from 149.23-149.39.

USD/JPY Daily Chart

Chart prepared by James Stanley; data derived from Tradingview

EUR/JPY

There’s some history with EUR/JPY and the 170.00 level and that story saw the plot thicken in the July-August tangle at the level.

The pair came close to that price back in 2007 and 2008 without being able to test above, ultimately falling just 4.1 pips shy of testing above 170.00. But in 2024, with a full head of steam in April after the US CPI print, EUR/JPY was finally able to jump above that price, and it didn’t pullback below until July following another important US CPI print. That second CPI report pushed the prospect of US rate cuts and quickly Yen carry trades were unwinding, EUR/JPY included.

Ultimately it was the 155.00 level that stood in as support in August of last year and then again in February of this year, and since that second test, bulls have very much been in control of the trend with prices testing yet another fresh yearly high.

There was a bit of opportunity for bulls on the long side of the pair in late-July and early-August, as a pullback to that 170.00 level came into play around the FOMC and BoJ rate decisions, along with a higher-low in the following week after which buyers took control for much of the month of August. As we trade into September, buyers are again vying for another fresh high in the pair and the next major level sitting overhead is the 175.00 psychological level. For support, it’s the zone around the 76.4 and 78.6% Fibonacci retracements that had set prior resistance that remains of interest.

EUR/JPY Daily Chart

Chart prepared by James Stanley; data derived from Tradingview

GBP/JPY

There’s some nuance at work in GBP/JPY at the moment as the pair once again tests the psychological level at 200.00. That’s been a story since back in July, when GBP/JPY came 2.5 pips away from the level before snapping back. More recently, however, there’s been higher-lows since the late-August test at 198.08, and this morning brought a slightly higher-high, indicating that bulls are breaking through a little bit more on recurrent trips above 200.00.

The question now is whether another higher-low can hold and then related, whether one of these next tests above 200.00 brings on a continuation of bullish momentum. For now, I’m tracking supports at 199.28 and 198.94. There could even be a justifiable case for support at 198.60 if or when that comes into play.

GBP/JPY Daily Chart

Chart prepared by James Stanley; data derived from Tradingview

--- written by James Stanley, Senior Strategist