News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
Oil - US Crude
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
More View more
Real Time News
  • Forex liquidity makes it easy for traders to sell and buy currencies without delay, and also creates tight spreads for favorable quotes. Low costs and large scope to various markets make it the most frequently traded market in the world. Learn more here: https://t.co/arxYmtQeUn https://t.co/rFlQtyQS81
  • Canadian Dollar snapped a three-week losing streak after USD/CAD stalled at key technical resistance. Get your CAD weekly forecast from @MBForex here: https://t.co/BPHuKecwnz https://t.co/73OmuCKfU9
  • Forex quotes reflect the price of different currencies at any point in time. Since a trader’s profit or loss is determined by movements in price, it is essential to develop a sound understanding of how to read currency pairs. Learn how to read quotes here: https://t.co/CNtqrKWDBY https://t.co/KzhQnGiLyt
  • A currency carry trade involves borrowing a low-yielding currency in order to buy a higher yielding currency in an attempt to profit from the interest rate differential. Find out if the carry trade suits your trading style here: https://t.co/7t4BzmLg8w https://t.co/cuneuJNZlH
  • Get your snapshot update of the of top level exchanges and key index performance from around the globe here: https://t.co/d8Re5anlG5 https://t.co/danCiP5vqK
  • Traders utilize varying time frames to speculate in the forex market. The two most common are long- and short-term-time frames which transmits through to trend and trigger charts. Learn more about time-frame analysis here: https://t.co/9S5tXIs3SX https://t.co/JhYoQ7I19K
  • The Nasdaq 100 index is aiming to breach a key resistance level at 14,950 for a second time. A successful attempt may open the door to further gains, although the MACD indicator flags signs of weakness. Get your equities forecast from @margaretyjy here: https://t.co/BEYupi32qB https://t.co/PWeXE8tZVY
  • Currency exchange rates are impacted by several factors. Are different world leaders a contributing factor? Find out here: https://t.co/4jsORznRTE https://t.co/t34kotPE8R
  • Many people are attracted to forex trading due to the amount of leverage that brokers provide. Leverage allows traders to gain more exposure in financial markets than what they are required to pay for. Learn about FX leverage here: https://t.co/BdgFmkRxVw https://t.co/lM1OIJdjhr
  • Trading Forex is not a shortcut to instant wealth, excessive leverage can magnify losses, and sentiment is a powerful indicator. Learn about these principles in depth here: https://t.co/lZFM8youtX https://t.co/6qGEVjDlN6
Japanese Yen Q3 Technical Forecast: Weakness Appears Likely in Q3

Japanese Yen Q3 Technical Forecast: Weakness Appears Likely in Q3

Diego Colman, Market Analyst

Long-term price action overview

USD/JPY appears to be in a stronger state if we look at price action over the last ten years. During this long period of time, the exchange rate has moved from the 75.00 handle in 2011 to the 111.00 area in the second quarter of 2021. This information, however, may not be very useful or actionable for forex traders who often times are inclined to get in and out of positions on timescales ranging from a few days to weeks. For this reason, we turn our attention to what has transpired over a shorter timeframe.

To read the full Japanese Yen forecast including the fundamental outlook, download our new 3Q trading guide from the DailyFX Free Trading Guides!

Focusing on the weekly chart, we can see that USD/JPY has traded with a negative bias, moving within the confines of a long-term descending channel and setting progressively lower highs for seven consecutive years. In fact, after 2015, every yearly high has been lower than the preceding yearly high. The following table illustrates this pattern:

Japanese Yen Q3 Technical Forecast: Weakness Appears Likely in Q3

After steady declines during the last few years, USD/JPY has been rising steadily in the first half of 2021, rebounding roughly 8% from the January low of 102.60. Following this robust rally, the pair now threatens an area of key resistance near 111.00/111.20, a technical barrier created by the upper limit of the long-term bearish channel mentioned earlier (see weekly chart below). Traders should carefully watch price action dynamics in this area because if that resistance is broken, the pair could gain further and conquer a new yearly high above 112.23, putting an end to the lower highs pattern in play since 2015. Needless to say, this breakout could create strong bullish momentum for the greenback

USD/JPY WEEKLY CHART (2011-2021)

Japanese Yen Q3 Technical Forecast: Weakness Appears Likely in Q3

Chart prepared by Diego Colman, Source: IG

USD/JPY medium-term bias points to upside amid possible breakout

Zooming in on the daily chart, we can see that second quarter brought moderate levels of volatility for USD/JPY, but when it was all said and done, the pair managed to end the three month period little changed, thanks in part to a dollar rally in the last stretch of June. The greenback was able to recover some of its shine after the Federal Reserve brought forward to 2023 its interest rate lift-off and began preliminary deliberations to scale back asset purchases .

The FOMC hawkish shift briefly pushed the USD/JPY towards the 111.00 psychological level, but follow-through buying momentum appears to have weakened as lower US treasury yields at the long-end of the curve dented appetite for long dollar exposure.

In any case, irrespective of market noise and many ups and down during Q2, USD/JPY appears to be in an uptrend over the medium term, starting in early January. The fact that price is above its 200 day moving average and the presence of higher lows guided by a six-month ascending trendline confirms this bias (see daily chart below)

For bullish impulse to accelerate in the third quarter, the pair needs to climb decisively above confluent resistance near 111.00/111.20. If bulls manage to push prices above this ceiling, the USD/JPY outlook would be tilted higher, with the 2020 high at 112.33 becoming the immediate focus, followed by the 114.55/114.73 area. For the bullish scenario to remain valid, USD/JPY must remain above the April swing low (107.48) and the 200 day SMA.

On the contrary, if USD/JPY fails to pierce the 111.00/111.20 area and pivots lower, sellers can regain control of the market and provoke a drop toward trendline support, near 110.00 at the time of this writing. Should prices fall below this level, the next relevant support in play appears at 107.48, a floor established by the April swing low. If this technical support is taken out, downside pressure could strengthen, paving the way for a large sell-off.

Japanese Yen Q3 Technical Forecast: Weakness Appears Likely in Q3

Chart prepared by Diego Colman, Source: IG

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

DISCLOSURES