Japanese Yen Technical Outlook: USD/JPY, EUR/JPY, GBP/JPY
Original analysis by Richard Snow, Forex.com
Date: July 21, 2025
The Japanese yen continues to face downward pressure across the board, particularly against major counterparts like the US dollar (USD), euro (EUR), and British pound (GBP). After a brief stint of strength earlier in the year due to potential action by the Bank of Japan (BoJ), recent developments have shifted investor sentiment back toward yen weakness. This article explores the technical outlook for the USD/JPY, EUR/JPY, and GBP/JPY currency pairs, drawing on recent price action, momentum indicators, and key support/resistance levels.
JPY Weakness Persists Despite BoJ Speculation
Recent comments from BoJ officials suggested a potential tightening of monetary policy, which initially lent some support to the yen. However, a lack of follow-through in terms of interest rate hikes or balance sheet adjustments has allowed market participants to re-engage in yen shorts. The divergence between rising interest rates in the US and Europe and the ultra-loose policies of the BoJ remains a key driving force for these currency pairs.
Technical analysis showcases this reality, with all three pairs — USD/JPY, EUR/JPY, and GBP/JPY — showing renewed bullish momentum from a chart perspective.
USD/JPY Technical Outlook
USD/JPY continues to trend higher, approaching levels last seen in late 2023. The pair recently found support around 155.00 before advancing strongly.
Key Technical Highlights:
– USD/JPY remains well above its 200-day and 50-day simple moving averages (SMA), underscoring the pair’s bullish bias.
– The most immediate resistance lies at the psychological 160.00 handle, a level last tested earlier in the year.
– RSI has not yet entered oversold territory on the daily chart, suggesting there may be more room for upside.
– Any pullback may retest former resistance at 157.80, now turned support.
– If bulls manage to push through 160.00 decisively, the pair may set sights on interim resistance at 161.80 and potentially as high as 164.00 in the medium term.
From a macro perspective, widening interest rate differentials between the US and Japan continue to favor dollar appreciation. The Federal Reserve has maintained a hawkish tone, with lingering inflation data supporting the case for staying at restrictive levels longer. This has underpinned strong buying interest in USD/JPY.
Critical Levels to Watch:
– Support: 157.80, 156.20, 155.00
– Resistance: 160.00, 161.80, 164.00
A sustained break below 155.00 could indicate a potential reversal, but as long as that level holds, the technical outlook remains bullish.
EUR/JPY Technical Outlook
EUR/JPY has maintained a steady uptrend since mid-2024 and now sits near multi-year highs. Euro strength has been underpinned by persistent rate hikes from the European Central Bank (ECB), while the yen’s weakness has provided a supportive crosswind.
Key Technical Highlights:
– The pair is trading comfortably above its 50-day SMA and has formed a series of higher highs and higher lows since May 2024.
– Momentum indicators such as RSI are beginning to flirt with overbought levels. While not yet signaling exhaustion, traders should monitor for divergence between price and momentum.
– Immediate resistance lies at 174.50, with the next level of psychological importance at 175.00.
– On the downside, initial support lies at 172.00, with more firm support near 170.50 (a prior consolidation zone).
Uptrend Structure:
– Price action suggests the uptrend is well-supported, with bullish engulfing candles on multiple timeframes further confirming upward pressure.
– As long as EUR/JPY remains above the uptrend line dating back to early
Explore this further here: USD/JPY trading.