Japanese Yen Weekly Forecast: Bearish
- Japanese Yen weakened this past week, left in a precarious state
- Both USD/JPY and GBP/JPY are facing key resistance levels
- Confirmatory upside breakouts open the door to a bullish view
The Japanese Yen extended its losing streak against the US Dollar this past week. Broadly speaking, the currency has been weakening amid a push higher in Treasury yields. Bank of Japan’s monetary policy is likely to remain dovish compared to its major counterparts, leaving JPY sensitive to external developments. Gains in USD/JPY brought the exchange rate to highs from late June and early July.
This followed a bounce off the rising trendline from March which reinstated the broader upside focus. Meanwhile, the 141.95 inflection zone was reinforced last week after a failed attempt to break under it. This leaves the pair facing 145.07 heading into the new week. A breakout higher exposes the 61.8% Fibonacci extension level at 148.27 on the way toward the October high of 151.94.
In the event of a turn lower, keep a close eye on the 141.95 inflection zone before the rising trendline kicks in. The combination of these two may continue to maintain the broader bullish technical bias.
USD/JPY Daily Chart
The Japanese Yen remains in a similar position against the British Pound. Recent weakness has brought GBP/JPY back to the critical 184.01 ceiling established in late June. Meanwhile, the 50-day Moving Average (MA) was held this past week, reinstating the broader bullish perspective. A breakout through 184 exposes the November 2015 high of 188.81.
Beyond the latter sit the midpoint and 61.8% Fibonacci extension levels at 190.65 and 194.03, respectively. On the other hand, a confirmatory drop through the 50-day MA would offer an increasingly bearish bias that places the focus on the July low of 176.33. Falling through the latter exposes the 38.2% and midpoint of the Fibonacci retracement at 173.06 and 169.68, respectively.
GBP/JPY Daily Chart
--- Written by Daniel Dubrovsky, Senior Strategist for DailyFX.com
