Japanese Yen Technical Analysis: USD/JPY Range Looks Safe Enough
Japanese Yen Technical Analysis Talking Points:
- USD/JPY remains confined to a broad trading range, with no clear sign that it’s about to break
- An enduring uptrend suggests a modest upside bias however
- GBP/JPY is eyeing 2018’s low again
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The range base comes in at 112.34 which is just about exactly where the first, 23.6% Fibonacci retracement of USD/JPY’s rise to the highs of this year, from the lows of March, lies. That point held Dollar bears in check by forming the intraday lows of Monday and last Thursday and, indeed, has held since October 29.
The range top is some way above the market, at 114.17 and, while it looks in no immediate danger, the pair’s medium-term uptrend line from early April still holds, suggesting that current range trade retains a Dollar-bullish bias. The bulls’ next target lies in the 113.82 region which is where USD/JPY made its last significant top, on November 28. This is not too far above current market levels, but the sharp fall seen on December 3 will take some resolve to overcome.
Meanwhile the Brexit-battered UK Pound is suffering against the Yen, as it is against most other major traded currencies. GBP/JPY is back to lows not seen since August 21, and the lows for 2018, made just days before that, are now uncomfortably close.
The cross’ downtrend has steepened markedly since November 29, with the UK government’s decision this week to postpone a vote on its own Brexit deal sending the Pound lower across the board. Momentum indicators unsurprisingly suggest that the Pound is heading toward oversold territory at current levels. However, the unit will remain subject to considerable volatility. A revisit of this year’s lows seems all-too likely unless that downtrend breaks soon.
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--- Written by David Cottle, DailyFX Research
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