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EUR/JPY, GBP/JPY, CHF/JPY: Will Japanese Yen Weakening Resume Against European Currencies?

EUR/JPY, GBP/JPY, CHF/JPY: Will Japanese Yen Weakening Resume Against European Currencies?

Daniel McCarthy, Strategist

EUR/JPY, GBP/JPY, CHF/JPY - Talking Points

  • The JPY weakening against EUR, GBP and CHF has stalled of late
  • Sideways trading has set up some break-out points to watch
  • Have the Europe-Yen crosses peaked for now or will the trend resume?

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EUR/JPY Technical Analysis

Since the low seen in May 2020, EUR/JPY consistently found support on its way to a high of 134.55 in June this year. Shortly after that, the cross broke below the up-trend line and has moved down. A key support level at 128.29 was broken but prices failed to follow through. This established a new low/support level at 127.93 which, at the time, was the 260-day simple moving average (SMA). The 260-day SMA is now a support at 128.02.

On the topside, there is resistance at the most recent high of 130.56 and then the previous high of 134.55. The 55-day SMA resistance currently comes in at 130.25.

While some up-trend support levels have been breached, these are not convincing breaks and a sustained move below 127.90 is needed to confirm them. Looking upward, it looks like there’s a lot of wood to chop to make a new high and resume the up-trend.

Chart Created in TradingView

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GBP/JPY Technical Analysis

The shape of the GBP/JPY chart is similar to EUR/JPY, but there are some key differences. Most notably, the low seen in July did not breach the previous one seen in March, allowing for a Head and Shoulders technical set-up. This keeps the neckline at 148.53 intact and a key support. Taking the distance of the head (156.07) to the neckline (148.53), a break below 148.50 may open a move of similar magnitude toward 141.00. With that in mind, past performance is not indicative of future results. Additionally, there is a long-term support level at 142.71

On the topside, resistance comes in at the 55-day SMA of 152.31 and then the previous high at 153.44. Beyond that, the overall high of the year at 156.07 is the next significant resistance level.

Chart Created in TradingView

CHF/JPY Technical Analysis

Looking at the CHF/JPY chart, a stand-out characteristic of the cross is that it has a tendency to trade sideways on a regular basis. This range trading trait is not surprising given the similarities in the underlying currencies. The current levels to watch for a break-out are 118.65 to the downside and 121.21 on the topside.

Chart Created in TradingView

--- Written by Daniel McCarthy, Strategist for DailyFX.com

To contact Daniel, use the comments section below or @DanMcCathyFX on Twitter

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

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