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Japanese Yen Bulls Struggle For Control at Important USDJPY Support

Japanese Yen Bulls Struggle For Control at Important USDJPY Support

David Cottle, Analyst
What's on this page

Japanese Yen Technical Analysis Talking Points:

  • USD/JPY has bounced after breaking lower
  • It has since risen above a former downtrend line
  • Yen bulls probably remain in charge but must assert this soon

The Japanese Yen remains in the ascendant against the US Dollar but the latter’s bulls aren’t abandoning a key trading range without a fight.

US Dollar Vs Japanese Yen, Daily Chart

USD/JPY dropped briefly below support at 106.44 last week. That’s the 50% Fibonacci retracement point of the rise from the lows of March and it had previously held since the middle of that month. It’s also the lower boundary of a trading range which remains important for the pair. Its top comes in at 107.69, the 38.2% retracement point.

At present signals are a little mixed. The Dollar’s time below that range base was extremely limited, only one full day. Moreover, the fight back has already seen USD/JPY break above a formerly dominant downtrend line from March 25.

However, the ability of Dollar bulls to durably defend the range base is likely to be crucial now and they are under pressure. A longer period below the line will probably presage deeper falls whereas merely regaining it may not do any more than put those falls off. The longer-term downtrend from late February remains well above the market at 111.05.

The Japanese Yen’s fortunes against the Australian Dollar offer investors the chance to see how perhaps the purest haven play in the foreign exchange market is faring against perhaps its clearest pro-cyclical currency.

Australian Dollar Vs Japanese Yen, Daily Chart

At face value growth seems to be winning, with AUD/JPY’s clear uptrend channel from the lows of March still very much in force. That said momentum appears to be waning within that channel. The plateau reached between February 28 and March 6 remains beyond Aussie bulls and their time to recapture it may be running out.

It provides a band of resistance between 70.07 and 71.45. The cross has made one failed foray towards that in the past two weeks, and another appears to be running out of steam at this point.

If the Aussie can’t push up toward that band this week then the channel’s lower bound, in the 66.69 region, may face its first serious test since March 23. Support at May 6’s low of 67.71 will probably come into play first, however.

USD/JPY Bullish
Data provided by
of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily 1% 2% 1%
Weekly -2% 5% 3%
What does it mean for price action?
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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!

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