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JAPANESE YEN TECHNICAL ANALYSIS TALKING POINTS:

  • USD/JPY continues to edge higher
  • However, February’s peaks still elude the bulls
  • If they are going to surmount them, they need to get on with it

Find out what retail foreign exchange traders make of the Japanese Yen’s chances right now at the DailyFX Sentiment Page

The Japanese Yen remains on the back foot against a generally stronger US Dollar but there have been tentative signs of a little fightback in the past few sessions.

This seems reasonable enough on fundamental grounds. The US Dollar has itself perhaps benefitted from some haven-bid interest. This has come in the face of investor worries about the US nuclear-diplomacy position on Iran, political spits in Italy and ongoing concerns about global trade. The Japanese Yen generally plays the haven role too, so a bit of bullish activity should perhaps not surprise us.

It is important not to overplay it though. Technicall,y USD/JPY remains in the uptrend which has dominated proceedings since the lows of late March.

However, the highs of early February- around 110.30- continue to stymie Dollar bulls and are starting to seem a quite-formidable barrier. The pair seems to have topped out below them for now, and even that uptrend channel is facing a downside test on the daily chart.

US Dollar Vs Japanese Yen, Daily Chart

So far it has survived it, but the channel bears watching nonetheless. If -as seems likely- USD/JPY settles into a range between its recent low of 108.69 and May 2’s high of 110.05, then a break of the channel to the downside seems inevitable over the next couple of days.

Whether such a range would be merely consolidative, presaging another push higher, or the marking of a new, lower high, is difficult to say. The pair does not look overbought by any standards, and its moving averages don’t suggest a breakout either way.

A good short-term strategy might be to play for upside while current support levels hold, but bear in mind that the bulls are leaving it rather late if they actually have the resolve to take out those February peaks.

AUSTRALIAN DOLLAR WILTS AGAIN

The Australian Dollar meanwhile had settled into broad range trading against the Japanese Yen, and the range was at least some way above the lows of late March. That fact may have given some comfort to Aussie bulls. However AUD/JPY now seems to be wilting toward those lows once again. The current range base of JPY81.20 is under immediate threat and, if it gives way, then those March lows at JPY80.56 will be back in focus.

Australian Dollar Vs Japanese Yen, Daily Chart

RESOURCES FOR TRADERS

Whether you’re new to trading or an old hand DailyFX has plenty of resources to help you. There’s our trading sentiment indicator which shows you live how IG clients are positioned right now. We also hold educational and analytical webinars and offer trading guides, with one specifically aimed at those new to foreign exchange markets. There’s also a Bitcoin guide. Be sure to make the most of them all. They were written by our seasoned trading experts and they’re all free.

--- Written by David Cottle, DailyFX Research

Follow David on Twitter@DavidCottleFX or use the Comments section below to get in touch!