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Japanese Yen Technical Forecast: EUR/JPY, AUD/JPY, GBP/JPY, USD/JPY

Yen, EURJPY, AUDJPY, GBPJPY, USDJPY Technical Forecast

  • USD/JPY has rallied by more than 1,000 pips from last week’s low.
  • AUD/JPY and EUR/JPY carry breakdown potential after digestion of recent short-side moves.
  • GBP/JPY remains on slipper ground; but a hold of resistance around the 130.00 level may make the short-side scenario attractive again.

Markets in Turmoil, Yen on the Run

Yen-weakness continued to show against many major currencies this week; now tallying a move of move than 1,000 pips in USD/JPY as a startling turn-around has taken place. While the two-week-outlay didn’t start this way, Yen-weakness has taken over in a number of major pairs as markets expect the Bank of Japan to remain very busy. The BoJ has been at the source of the move as the bank has continued to step-up bond buys; and many market analysts are looking for that to continue as the BoJ looks

It was a week of weakness for most currencies not named the US Dollar, and the Japanese Yen continued its remarkable run against the USD as USD/JPY has now rallied by more than 1,000 pips from last week’s low. To be sure, a large portion of this drive has come from an outsized rally in the Greenback, but JPY-weakness has hung around as well with markets anticipating even more stimulus from the Bank of Japan in the days, weeks and months ahead.

USD/JPY

Last week started with a huge rush of Yen-strength against the US Dollar, with USD/JPY purging down to the 101.19 level that had marked the low on the night of the 2016 Presidential Election. But that’s when US Dollar bulls kicked in, starting a rally that would run by more than 1,000 pips over the next couple of weeks.

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Price action in the pair has put in a v-shaped recovery after setting a fresh three-year-low after last week’s open. USD/JPY is now testing the February swing-high, which is very near the 2019 swing high of 112.40. Given the momentum in both US Dollar strength and Japanese Yen weakness, the forecast for USD/JPY will be set to bullish for the week ahead.

USD/JPY Technical Forecast: Bullish

USD/JPY Monthly Price Chart

USD/JPY Monthly Price Chart

Chart prepared by James Stanley; USD/JPY on Tradingview

EUR/JPY

Similarly, EUR/JPY started last week with Yen-strength as the pair dipped-down to a fresh six-month-low before finding a bit of support; and a Friday rally helped the pair close last week in the green. Since then, however, buyers haven’t been able to fire much of a rally in the pair and without that extra element of USD-strength as looked at above, EUR/JPY has moved into a pattern of digestion. The bulk of this week’s price action saw the pair coil into a tighter and tighter range, indicating that breakout potential may be soon nearing.

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EUR/JPY Four-Hour Price Chart

EUR/JPY Four-Hour Price Chart

Chart prepared by James Stanley; EUR/JPY on Tradingview

A longer-term area of support lurks underneath current price action around the 117.00 level; and given this week’s coiling price action that rebuffed last week’s net move of EUR/JPY strength, bearish potential remains and the forecast for next week will be set as such.

EUR/JPY Technical Forecast: Bearish

EUR/JPY Weekly Price Chart

EUR/JPY Weekly Price Chart

Chart prepared by James Stanley; EUR/JPY on Tradingview

AUD/JPY

AUD/JPY continued to break down this week, with the pair pushing down to the 60.00 level for the first time in 11 years. After this low was set on Thursday, a sizable pullback developed as a meltdown in Aussie saw what appear to be short-cover flows; but sellers were on standby to defend the 65.00 area, highlighting the potential for continuation into next week. The forecast for AUD/JPY will be set to bearish for the week ahead.

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AUD/JPY Technical Forecast: Bearish

AUD/JPY Eight-Hour Price Chart

AUD/JPY Eight-Hour Chart

Chart prepared by James Stanley; AUD/JPY on Tradingview

GBP/JPY

It was a similarly brutal week in the British Pound as the Bank of England announced yet another rate cut, sending GBP/USD down to a fresh 35-year low as price action decisively sliced below the 1.2000 spot. GBP/JPY wasn’t as bearish given the move that was building in USD/JPY, but similar to both EUR/JPY and AUD/JPY above, potential for further losses remains.

At this point, traders would likely want to focus those strategies of Yen-strength against what they consider will be the weakest currencies over the next few weeks. And strong arguments can be made for all of the Aussie, the Euro and the British Pound. But, will both EUR/JPY and AUD/JPY have some element of resistance to work with, GBP/JPY appears a bit more chaotic and that could be more difficult to wrangle for bearish strategies.

The 130.00 area could offer some resistance potential should this price come into play next week; and that could re-open the door for bearish scenarios. Until then, the forecast will be set to neutral as both EUR/JPY and AUD/JPY can make for more compelling arguments towards Yen-strength.

GBP/JPY Weekly Price Chart

GBP/JPY Weekly Price Chart

Chart prepared by James Stanley; GBP/JPY on Tradingview

— Written by James Stanley, Strategist for DailyFX.com

Contact and follow James on Twitter: @JStanleyFX