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Japanese Yen Technical Analysis Talking Points:

  • The Yen’s haven role has seen it rise again
  • Dollar bulls still have some cause t hope for a reversal however
  • GBPJPY could see an important monthly range break to the downside in July

Join our analysts for live, interactive coverage of all major Japanese economic data at the DailyFX Webinars. We’d love to have you along.

The Japanese Yen has strengthened over the past week as demand for perceived haven assets had added to its allure.

A persistent slide in US Treasury yields, waning hopes for Chinese-US trade settlement and the possibility of new US tariffs on European goods have all added to investors’ already lengthy worry list, so it’s hardly surprising that the Yen should play its hallowed fundamental role.

Technically USDJPY’s late-June bounce seems to have petered out at this week’s highs of 108.51 or so. This level was traded around between May 31 and June 19, a period which saw nearly two weeks of rather moribund market action shown in red on the chart below.

US Dollar Vs Japanese Yen, Daily Chart.

Still, the pair remains above the formerly pervasive downtrend line which has marked the Yen’s strengthening since late April. With the US disrupted for the Independence Day break it might yet be premature to write off the latest Dollar rally completely.

The Greenback is by no means overbought judging from its momentum indicators and this market may not need much excuse to get the rally back on track.

Immediate psychological support can probably be found on the downtrend line, which would put it at 107.29 currently. Below that the year’s effective low at 106.77 would probably come back into focus. Dollar bulls’ immediate concern will be to regain last week’s peaks. If they can then they can concentrate on the more impressive upside target of 109.59. Regaining that on a daily closing basis would see the sharp falls of May 31 completely erased.

That looks like a tall order for the present, but if the Dollar can get through the holiday period without falling to far then it’s also a realistic upside target for the coming month.

The Japanese Yen is doing similarly well against the British Pound at the moment. Much of the action in GBPJPY would seem to mirror that in USDJPY, with the year’s lows still uncomfortably close.

A look at the monthly chart makes Sterling bulls tricky position a little more obvious, with GBPJPY clearly testing the bottom of a range which has do far endured on a monthly-closing basis since November, 2016.

British Pound Vs Japanese Yen, Daily Chart.

If this month doesn’t bring an appreciable bounce for the Pound, then the bearish prospect of the first close below that range is a clear danger. 135.88 will be the level to watch through July.

Japanese Yen,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!

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