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Japanese Yen Outlook, Focus on the Dominant Trend: USD/JPY, EUR/JPY, NZD/JPY, CAD/JPY

Japanese Yen Outlook, Focus on the Dominant Trend: USD/JPY, EUR/JPY, NZD/JPY, CAD/JPY

Daniel Dubrovsky, Senior Strategist

Japanese Yen, USD/JPY, EUR/JPY, NZD/JPY, CAD/JPY – Technical Outlook

  • Japanese Yen has been consolidating following deep losses, will weakness resume?
  • USD/JPY eyeing 20-day moving average as EUR/JPY seems to be adhering to it
  • NZD/JPY at risk of extending losses on Double Top, CAD/JPY also has room to fall
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Following aggressive declines, the Japanese Yen has been consolidating against the US Dollar. Might its dominant drop resume? USD/JPY sits under the key 109.38 – 109.85 resistance zone following the emergence of negative RSI divergence, showing that upside momentum is fading. The 20-day Simple Moving Average (SMA) is quickly creeping up as it sits within the 107.94 – 108.16 former resistance zone. It could reinstate USD/JPY’s upside focus, with a break above 109.85 exposing last year’s peak. That said, there is room for prominent losses before prices touch rising support from the beginning of this year – see chart below.

USD/JPY Daily Chart

USD/JPY Daily Chart

Chart Created in TradingView

After some consolidation against the Euro as well, the Japanese Yen may be readying to resume its broader decline against it. The 20-day SMA seems to be pressuring EUR/JPY to the upside after prices recently tested the 61.8% Fibonacci extension at 128.72. This could result in another retest of 130.66 towards highs from July 2018. Breaching the latter exposes the September high from the same year at 133.13. Still, there may be room for further losses while still maintaining the dominant uptrend. For that, keep a close eye on rising support from last year’s bottom. The 127.50 – 127.07 inflection zone could also be pivotal.

EUR/JPY Daily Chart

EUR/JPY Daily Chart

Chart Created in TradingView

The Japanese Yen is pressuring key rising support from early November against the New Zealand Dollar. If NZD/JPY breaches this zone, that would expose the 50-day SMA below as it tests the neckline of a potential bearish Double Top chart pattern. The latter may be a preliminary signal of deeper losses ahead following negative RSI divergence. In such an outcome, potential rising support from March 2020 could reinstate the dominant upside focus on the daily chart below. Otherwise, resuming gains entails a push above December 2018 highs towards the 100% Fibonacci extension level at 80.39.

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NZD/JPY Daily Chart

NZD/JPY Daily Chart

Chart Created in TradingView

The Japanese Yen is also attempting to make a comeback against the Canadian Dollar after CAD/JPY left behind a key zone of resistance between 88.08 and 87.71. Prices have fallen to the 78.6% Fibonacci extension at 86.82, with the 61.8% level at 86.13 not far below that. The 20-day SMA is also quickly creeping up which could reinstate the dominant uptrend. Otherwise, a drop through it exposes the former 84.74 – 84.44 resistance zone which could come into play as new support. That said, in the event of deeper losses, rising support from October and March 2020 could still maintain the upside focus in the long run.

CAD/JPY Daily Chart

CAD/JPY Daily Chart

Chart Created in TradingView

--- Written by Daniel Dubrovsky, Strategist for DailyFX.com

To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter

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

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