**Japanese Yen Price Action Setups: USD/JPY, EUR/JPY, GBP/JPY**
*Original article by James Stanley, Forex.com*
The Japanese Yen has faced intense pressure through 2024 after a tumultuous 2023, characterized by persistent depreciation and rising concerns of possible intervention by the Bank of Japan (BoJ). As we delve deeper into the price action setups for three major Yen pairs—USD/JPY, EUR/JPY, and GBP/JPY—it’s essential to approach these markets with a comprehensive technical and fundamental perspective. In this analysis, we assess the evolving dynamics of the Yen and evaluate potential opportunities and risks in these high-profile currency pairs.
## Overview: The Fundamental Backdrop for the Yen
The Japanese Yen has consistently lagged behind other major currencies due to the BoJ’s dovish stance amid a tightening cycle by its global counterparts. Unlike the Federal Reserve, European Central Bank, or Bank of England, the BoJ has remained reluctant to raise interest rates substantially due to longstanding concerns over deflation and structurally low domestic demand.
Key fundamental pressures influencing the Yen include:
– **Divergent monetary policies**: While central banks like the Fed and ECB have raised rates to combat inflation, the BoJ has adopted a more cautious approach, focusing on economic recovery and price stability.
– **Interest rate differentials**: The widening gap between Japanese yields and those in the US or EU has incentivized capital flows out of Japan, weakening the Yen.
– **BoJ intervention threat**: Market participants remain on high alert for potential direct interventions by the BoJ, especially when the Yen weakens significantly.
Amid this backdrop, the Yen remains highly sensitive to shifts in global yields, central bank commentary, and risk sentiment. The rest of this article evaluates the technical configuration of three major Yen pairs: USD/JPY, EUR/JPY, and GBP/JPY.
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## USD/JPY: Consolidation After a Steep Rally
USD/JPY soared throughout the first half of 2024, at one point testing levels last seen in 1990. This rally was driven by robust US economic data, elevated Treasury yields, and a still-dovish BoJ. However, intervention risks and signs of exhaustion have started to curb the bullish momentum.
### Key Technical Highlights
– **Long-term Bullish Trend**: The pair maintains a broader bullish bias supported by higher highs and higher lows on both daily and weekly timeframes.
– **Resistance at 160.00**: This psychological level has become a major ceiling. Price recently approached this area before sellers stepped in.
– **Support Zones**: Near-term support appears at 155.00 and again at 151.90–152.00, which served as previous resistance turned support.
– **Potential Double Top**: The failure to break cleanly above 160.00 and a subsequent pullback could hint at a double top formation, a bearish reversal pattern.
### Price Action Strategy
Given the central bank divergence, traders may look for bullish continuation entries on dips toward key support zones. However, caution is warranted near the 160.00 mark due to potential Japanese intervention.
**Bullish Scenario:**
– Look for a bounce off the 155.00 or 152.00 support regions.
– A clean break above 160.00 could open the door to higher targets, potentially up to 163.00.
**Bearish Scenario:**
– Rejection at 160.00 followed by a break below 152.00 may signal the start of a deeper pullback.
– Watch for confirmations such as lower lows on the 4-hour chart or a bearish crossover in momentum indicators.
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## EUR/JPY: Testing Multi-Year Highs with Momentum
EUR/JPY has been one of the top-performing Yen crosses in 2024. The Euro has garnered support from the ECB holding rates in restrictive territory while inflation persists. Conversely, the Yen remains fundamentally weak due to
Explore this further here: USD/JPY trading.