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Japanese Yen Outlook: USD/JPY Bias Remains Lower, Key Support Eyed

Japanese Yen Outlook: USD/JPY Bias Remains Lower, Key Support Eyed

Justin McQueen, Strategist

USD/JPY Price Analysis & News

  • USD/JPY Bias is Lower
  • Watch US Yields for USD/JPY Direction
  • Sizeable Option Expiries to Maintain 104.00-104.50 range

USD/JPY has traded within a relatively narrow range thus far, however, while the bias remains lower, a continued push higher in US yields as has been the case this week could offset that bias. That said, with the Federal Reserve looking set to increase their weighted average maturities (i.e. purchasing further up the curve), this can place a cap on the recent rise in US yields in the long end.

Firm resistance is located at 104.75-85 which coincides with the weekly highs and 50DMA. In turn, rallies in USD/JPY could be faded from these levels, while a change in the trend could occur from a break of trendline resistance at 105.40, where a close above opens the door to the 200DMA situated at 106.45. Elsewhere, it is also worth noting that sizeable option strikes expiring on Friday at 104.00 (3.4bln) and 104.50 (1.7bln) may set the range for the next 24hours.

On the downside, aside from the psychological 104.00 handle, support resides at 103.80 with a break below putting the November lows back in focus at 103-15-20.

For a complete guide of using moving averages in trading, review this explainer for traders

USD/JPY Daily Chart

Source: Refinitiv

IG Client Sentiment (USD/JPY)

Retail trader data shows 63.58% of traders are net-long with the ratio of traders long to short at 1.75 to 1. The number of traders net-long is 1.75% lower than yesterday and 1.94% lower from last week, while the number of traders net-short is 6.24% higher than yesterday and 4.89% higher from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests USD/JPY prices may continue to fall.

Yet traders are less net-long than yesterday and compared with last week. Recent changes in sentiment warn that the current USD/JPY price trend may soon reverse higher despite the fact traders remain net-long.

Data provided by
of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily -9% -6% -7%
Weekly 0% -11% -6%
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Source: IG/DailyFX

A look at Institutional Positioning Highlights Investors Piling into the Japanese Yen

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.