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Technical Analysis: Impressive USD/JPY Rise Hits The Buffers

Technical Analysis: Impressive USD/JPY Rise Hits The Buffers

David Cottle, Analyst


Talking Points:

  • USD/JPY’s climb has been impressive these past three weeks
  • However, it seems to be running out of steam
  • Similar exhaustion is evident in other Yen crosses

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The US Dollar has put in an impressive run of gains against the Japanese Yen since the current rush higher started on April 18.

Of the 21 trading days since, fully 15 have seen USD/JPY rise. However, all rallies end be they never so strong and the current one looks to be petering out before it has topped some important milestones.

The recent peak is the March 10 intraday top of 115.51. That would need to be conquered before USD/JPY bulls could consider a run at a much more significant level – the 2017 peak of 118.61 hit on January 3.

However, for the moment bulls seem to have run out of puff some way below both, at about the 114.40 level which has contained USD/JPY’s rise on Wednesday and Thursday of this week. Worryingly this level also put them off on February 14 and March 2. The pair made a minor top here and retreated on both days.

USD/JPY needs to push on at least as far as that March 10 peak of 115.51 to keep this rally humming. If it can’t, look out below as the 108 lows of mid-April could be back in play.

The picture looks similarly ominous if we take a look at GBP/JPY.

Here it looks as though the index is preparing to make a double top in the 147.68 region. Admittedly the failure of this cross’s climb up from 136.84 on April 17 is not yet confirmed. However, it does seem to have faltered at the highs in the last couple of days.

Its RSI readings might also suggest a degree of overbuying here, even if at levels around 70 they are not yet conclusively extreme.

You can more or less take your pick with Yen crosses and this faltering rally/double top picture emerges, backed up by rising RSI. It’s clear that Yen bears have a little work to do at the moment.

--- Written by David Cottle, DailyFX Research

Contact and follow David on Twitter: @DavidCottleFX

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