Never miss a story from David Cottle

Subscribe to receive daily updates on publications
Please enter valid First Name
Please fill out this field.
Please enter valid Last Name
Please fill out this field.
Please enter valid email
Please fill out this field.
Please select a country

I’d like to receive information from DailyFX and IG about trading opportunities and their products and services via email.

Please fill out this field.

Your Forecast Is Headed to Your Inbox

But don't just read our analysis - put it to the rest. Your forecast comes with a free demo account from our provider, IG, so you can try out trading with zero risk.

Your demo is preloaded with £10,000 virtual funds, which you can use to trade over 10,000 live global markets.

We'll email you login details shortly.

Learn More about Your Demo

You are subscribed to David Cottle

You can manage your subscriptions by following the link in the footer of each email you will receive

An error occurred submitting your form.
Please try again later.

Talking Points

  • After a long period of dominance, the Yen is returning some of its gains
  • The US Dollar has been a clear beneficiary, with the downtrend from this year’s peaks broken
  • The New Zealand Dollar has done well too, but seems to be taking a breath

Just getting started in the trading world? Our beginners’ guide is here to help

The Japanese Yen looks to be in more trouble against the US Dollar than it has been for quite some time.

Ten of the last thirteen trading days have seen USD/JPY gain, snapping in the process its long downtrend from July 11’s peak. The pair’s steep climb since September 8 has seen it scale peaks not seen since mid-July.

The fundamental backdrop for this surge of vigor is not hard to pin down. Tensions over North Korea appear to have eased, global risk appetite has been revived and the chasm between tightening US monetary policy and Japan’s uber-looseness continues to yawn.

Japanese Yen Technical Analysis: Year's Lows Creep Back Into Focus

The question now of course is how far can USD/JPY go. Some pause for consolidation would seem to be in order, but a look at the pair’s momentum indicators does not yet suggest much overbuying at all, never mind the sort of extreme enthusiasm which might argue for a pause.

USD/JPY is now above its 20-, 50- and 100-day moving averages, but the 20-day crossed above the 50 on September 20. This is usually considered to be a pretty bullish signal and suggests that the pair has more to give bulls yet.

Japanese Yen Technical Analysis: Year's Lows Creep Back Into Focus

Immediate upside levels to conjure with on the daily chart look like July 12’s close of 112.59 and July 13’s 113.36.

Meanwhile the New Zealand Dollar has also staged an impressive bounce against the Japanese Yen this month, a month which started with the kiwi in a spot of trouble, at least as far as bulls were concerned. However, the latest rise seems to have petered out some way short of July’s 2017 high. This may be down to general jitters around the New Zealand currency ahead of this weekend’s general election, in the face of neck-and-neck polling and an uncertain coalition prospect.

It may this be too early to call current price action a definitive lower high, and the uncommitted could be well-advised to await the election result.

Japanese Yen Technical Analysis: Year's Lows Creep Back Into Focus

--- Written by David Cottle, DailyFX Research

Contact and follow David on Twitter:@DavidCottleFX