Japanese Yen Technical Analysis: USD/JPY, EUR/JPY, GBP/JPY
Original analysis by Matt Weller, FOREX.com
The Japanese Yen (JPY) has experienced notable weakness in recent months, continuing its trend of depreciation against major currencies such as the US Dollar (USD), Euro (EUR), and British Pound (GBP). Market participants are closely following developments from the Bank of Japan (BoJ), central bank policy expectations, and technical chart developments. In this technical analysis, we will examine three major Yen currency pairs: USD/JPY, EUR/JPY, and GBP/JPY.
This article provides a detailed look at the trends, critical support and resistance levels, and potential future movements based on price action and chart patterns.
Overview of JPY Weakness
The Japanese Yen has been trading near multi-decade lows against several major currencies. Traders are questioning whether the BoJ’s ongoing policy normalization will be sufficient to stem the tide of Yen depreciation. In contrast with other major central banks, the BoJ has maintained ultra-loose monetary policy far longer, which has contributed to the underperformance of the Yen.
Key factors influencing the Japanese Yen include:
– Lack of aggressive rate hikes from the Bank of Japan
– Persistent yield differentials favoring other currencies, such as the US Dollar and Euro
– Strong economic data and hawkish policy from the Federal Reserve and European Central Bank
– Market speculation around possible BoJ intervention to support the Yen
With that backdrop, here is a technical analysis of the major JPY crosses.
USD/JPY Technical Analysis
The USD/JPY pair has been advancing steadily, reaching highs last observed in the summer of 2022 and trading near the 145.00 psychological level.
Key Observations:
– Strong bullish momentum as the pair remains in an established uptrend
– The pair previously consolidated for several weeks around the 141.50–143.00 zone before breaking higher
– Current trade is hovering around the 145.00 level, which is historically significant due to prior intervention by Japanese authorities in 2022
– A break above the 145.00 level could open the door for further upside towards 147.50 or even 150.00, provided market sentiment remains supportive
Key Chart Levels:
– Support: 143.50, 141.50, and 139.00
– Resistance: 145.00, 147.50, and 150.00
Technical Indicators:
– The Relative Strength Index (RSI) is approaching overbought territory but has not signaled a reversal yet.
– Moving averages (50-day and 200-day) continue to slope upward, reinforcing the long-term uptrend.
Outlook:
If the USD/JPY pair maintains its break above the 145.00 level, traders may look for a move toward the prior resistance near 147.50 and possibly 150.00 over a multi-week time frame. However, BoJ intervention chatter may slow the upside momentum or introduce volatility.
EUR/JPY Technical Analysis
EUR/JPY has been another strong performer, recently reaching 15-year highs and showing little sign of major reversal. The bullish sentiment for the Euro, underpinned by ongoing rate hikes from the ECB, continues to weigh down the Yen in this pair.
Key Observations:
– The pair recently broke above key horizontal resistance at 158.00–160.00
– Price has accelerated higher over the past several weeks with multiple bullish candles on the weekly chart
– No signs of major bearish divergence or topping patterns
Key Chart Levels:
– Support: 158.00, 155.20, and 153.00
– Resistance: 161.50, 163.00, and 165.00
Technical Indicators:
– RSI remains healthy, hovering near the overbought zone but not extreme
– 50-day moving average is firmly above the 200-day average, confirming the longer-term bullish trend
Explore this further here: USD/JPY trading.