Japanese Yen Technical Analysis Update: Focus on USD/JPY, EUR/JPY, and GBP/JPY
By Matt Weller, FOREX.com
The Japanese Yen (JPY) continued its volatile trend across Forex markets, with traders closely watching key pairs such as USD/JPY, EUR/JPY, and GBP/JPY amid economic uncertainty and evolving monetary policy stances. The yen’s performance throughout 2024 has been under pressure due to the stark contrast in policy direction between the Bank of Japan (BoJ) and other major central banks like the Federal Reserve and the European Central Bank. Despite occasional strength fueled by safe-haven demand, the broader trajectory remains downward unless the BoJ signals a stronger stance toward rate normalization.
In this update, we explore the technical outlook for three significant yen pairs—USD/JPY, EUR/JPY, and GBP/JPY—as of mid-July 2024, highlighting key price levels, chart patterns, and potential scenarios over the coming weeks. This analysis draws on price action from multi-timeframe charts, momentum indicators, and other technical tools.
USD/JPY Outlook: Bulls Remain in Control, But Near-Term Resistance in Focus
The USD/JPY pair has remained in an ascending trajectory throughout much of 2024, reflecting persistent dollar strength and yen weakness. Price action continues to form a strong bullish structure, with higher highs and higher lows observed on the daily chart.
Key Observations:
• Trend Structure: The pair maintains a solid uptrend that began around 138.00 in early 2024. As of July 17, USD/JPY trades near the 160.00 handle, having tested multi-decade highs.
• Support Zones: The nearest support lies near 158.00, where buyers have consistently re-entered the market. A deeper retreat could find support at 156.00, coinciding with the rising 50-day simple moving average (SMA).
• Resistance Levels: The immediate resistance is the psychological and technical level of 160.00. A confirmed breakout above this barrier could pave the way toward 162.00 and potentially 164.00, levels not seen since the early 1990s.
• Momentum Indicators: The Relative Strength Index (RSI) on the daily chart remains in bullish territory but is approaching overbought thresholds near 70. This suggests a possible pullback or consolidation in the short term before further upside.
• Candlestick Patterns: Price action shows a series of bullish candlesticks, including marubozu candles, which reflect strong buying pressure. However, traders should watch for bearish reversal patterns such as shooting stars or evening stars near key resistance levels.
Scenarios to Watch:
• Bullish Breakout: If 160.00 is broken decisively with strong volume and momentum, buyers may target higher resistance zones around 162.50 and possibly 165.00.
• Consolidation or Pullback: Failure to break above 160.00 may result in sideways movement. A retracement toward 158.00 or lower could offer renewed long entries, assuming the uptrend remains intact.
• Trend Reversal: A breakdown below the 156.00 zone, coupled with weakening RSI and MACD bearish crossover, would suggest a loss in bullish momentum and open the door for deeper corrections toward 153.00.
EUR/JPY Analysis: Extended Rally Faces Exhaustion Signals
EUR/JPY has mirrored USD/JPY’s strength, with the euro benefitting from improving Eurozone macroeconomic figures and lingering BoJ dovishness. However, technical indicators now point toward potential exhaustion in the pair’s prolonged rally.
Key Technical Insights:
• Uptrend Continuation: The pair has risen by over 800 pips since May, reaching new multi-year highs above 174.00. The daily and weekly chart structures support a bullish bias.
• Immediate Support:
Explore this further here: USD/JPY trading.