Japanese Yen Technical Analysis: USD/JPY Stalls Before 1st Hurdle
- USD/JPY has had a great run but appears to be losing steam
- This needn’t be awful news, but the short-term range looks set to endure
- GBP/JPY has a similar story to tell
The Japanese Yen has been under pressure against the US Dollar since June 15.
On that day, an impressive charge by USD/JPY bulls took the pair well above a key downtrend line which had capped it ever since the year’s highs were struck on May 10. That line has been rendered of merely historical interest by the run higher since. However, there are no signs that this renewed vigor is waning and, indeed, that it may be doing so before it has managed to top even the first key obstacle in its way.
The closing levels of May 15 (113.64) and 16 (112.80) are possibly significant as both days hit the market with sharp falls. While USD/JPY did manage to poke its nose above that second resistance level this week, it only did so once and on an intra-day basis, on Thursday.
Those resistance levels will have to be overcome if the pair is to move up and away from the broad range trade which has been in place since May 17, between 112.78 and 109.25. USD/JPY’s inability to crack them doesn’t necessarily mean a catastrophic fall, but it does suggest that that range trade will endure.
The British Pound has put in a remarkable run of gains against the Japanese currency, with fundamentals largely in the driving seat. Bank of England Governor Mark Carney has at least raised the prospect of higher interest rates while a reduced Parliamentary majority for the ruling Conservative Party may mean a “softer” Brexit.
Technically, GBP/JPY remains tantalizingly close to its high for the year. That was the 147.08 area reached on May 10. However, the cross seems to be losing a measure of impetus and has clearly stalled at the 146.57 resistance area. This was May 15’s closing high. That level is going to have to break on at least a daily basis if another assault on the summit is to take place.
--- 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.