Japanese Yen Technical Analysis: USD/JPY, EUR/JPY ATH, GBP/JPY 215

While USD/JPY is often the focal point and usually the market being carefully tracked by the Finance Ministry, it’s EUR/JPY and GBP/JPY that are stealing the show right now with the latter pushing up to re-test the 215.00 level and the former breaking out to a fresh all-time-high.

Behind the moves is a dynamic of relative weakness in the Greenback that’s allowed for USD/JPY to remain below the vaulted 160.00 psychological level. And as both EUR/USD and GBP/USD have rallied over the past week on the back of that USD-weakness, so too has EUR/JPY and GBP/JPY perhaps in an even more notable manner.

I’ll get to those two markets in a moment, but first, the major pair needs to be addressed. As I shared in the weekend video, I think the scenario that could allow for a 160.00 test would make it difficult for the BoJ to intervene to defend that price level. If we’re seeing tensions rise and oil prices rally, the BoJ may look at their finite FX reserves and the precious few bullets they have to try to impact the spot rate and think twice before showing aggression so early. Instead, we may get a similar scenario as September/October of 2022, when the BoJ’s defense of 145.00 failed, bulls ran USD/JPY up to 150 and, eventually, the Bank of Japan had to spring to action to set a high at 151.95.

Even that looked as though it could fail, but luckily for the Bank of Japan a below-expected US CPI report a few weeks later gave hope that maybe the Fed could start to slow down rate hikes. That’s ultimately what helped to compel the 50% reversal of the 2021-2022 rally, with support coming into play the following January as bulls simply loaded the boat again.

When the 151.95 level was under attack in early-2024, with a breakout ultimately hitting in April of that year as strong inflation in the US drove worries of the Fed not being able to cut later in the year, the BoJ, again, backed up, this time to the 160.00 level.

And even that wasn’t a hard-set line in the sand, as the initial intervention then failed as support showed at 151.95 – and then the next test above 160.00 was not met with intervention, with the high ultimately setting at 161.95 until the BoJ eventually jumped into the market on the morning of July 11^th that year.

Since then, 160.00 has been the line in the sand, but it might not be for long if we do get that scenario that pushes DXY-higher on the back of tensions in Iran.

USD/JPY Weekly Price Chart

Chart prepared by James Stanley; data derived from Tradingview

USD/JPY Near-Term

To be sure, there is potential for a breakout in USD/JPY. As you can see from the weekly chart buyers have so far defended pullbacks quite well around the 158.00 handle, so its still too early to declare bears to be in charge.

But, situationally for that to happen, we’re probably going to need to see something similar as what caused the 145.00 break back in 2022 or the 151.95 break in 2024 – and that’s an adjustment to US rate probabilities. Right now the focus is firmly on the conflict in Iran so, logically, that’s where the driver would need to source from.

But, there’s also the option of looking elsewhere, such as EUR/JPY or GBP/JPY which are already in the full-on breakout mode that USD/JPY hasn’t quite been able to exhibit.

In USD/JPY, shorter-term price action remains range-bound and the 158.00 level has already seen a couple of defenses. So for bulls in the pair, that becomes an area of interest to work with on pullback themes.

USD/JPY Four-Hour Price Chart

Chart prepared by James Stanley; data derived from Tradingview

EUR/JPY

EUR/JPY has been in a brisk bullish trend for more than a year now after finding support at 155.00. The move has now spanned more than 3,000 pips, but for the past two months and change that trend was on hold as price was narrowing deeper into a symmetrical triangle formation.

Normally a symmetrical triangle carries no directional bias: It’s simply lower-highs and higher-lows. But in this case, with a strong prevailing trend leading into the digestion, it can be construed in the direction of the prior trend as a bull pennant formation.

That is now breaking out in a very big way to a fresh all-time-high, and I looked at this a couple weeks ago in the Euro forecast.

EUR/JPY Daily Price Chart

Chart prepared by James Stanley; data derived from Tradingview

EUR/JPY Shorter-Term

The challenge with a breakout of this magnitude is that the breakout has already happened. So just chasing the move is often driven more by emotions and hope rather than strategy. But – we can see where prior structure has already played a role, as the previous lower-high at 186.22 came into play shortly after this week’s open before price launched up to a fresh ATH.

That level is now a possible support, as is the prior ATH at 186.88. If neither of those hold and we do get a pullback, I’d anticipate that something had shifted in terms of drivers, and that opens the door for a deeper pullback to 185.55 or 185.00.

EUR/JPY Four-Hour Chart

Chart prepared by James Stanley; data derived from Tradingview

GBP/JPY

While EUR/JPY is at a fresh ATH the context is a touch different in GBP/JPY, where the pair is still far below pre-GFC levels. Nonetheless, there is some comparison given that GBP/JPY is at a multi-year high while testing above a major psychological level at 215, so it’s similarly in an overbought status on shorter time frames but given that the main driver here appears to source back to the majors, I think there could be continuation potential here, as well.

From the daily chart, we can see just how developed that rally has become as the pair works on its sixth consecutive up day.

GBP/JPY Daily Chart

Chart prepared by James Stanley; data derived from Tradingview

GBP/JPY

The shorter-term chart shows just how stretched this rally has become, with a continued jump ever since the support test at 210 in late-March.

For support, I have levels at prior resistance of 214.30 and then another at 213.31, both of which could be viable on pullbacks.

GBP/JPY Four-Hour Chart

Chart prepared by James Stanley; data derived from Tradingview

--- written by James Stanley, Senior Market Analyst, Global Macro