USD/JPY Buoyed by US Data, GBP/JPY Wavers at Resistance

Japanese Yen Forecast:

• the Japanese Yen It has fallen significantly against its larger peers recently, weighed down by the Bank of Japan’s dovishness Monetary policy
• US dollar / Japanese yen It continues advancing towards the 145.00 handle, with rising US yields boosting the price U.S. dollar performance
• while, British pound / Japanese yen It fluctuates at 184.00 as the market becomes extended the prices Approaching major technical resistance

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The Japanese yen slowed in currency markets on Thursday, as traders remained overly pessimistic about the outlook for the currency following the Bank of Japan’s decision to maintain ultra-loose monetary policy at its June meeting.

Against the US dollar, the yen moderately weakened, with USD/JPY receiving further support from rising US Treasury yields after better-than-expected US economic data increased the possibility of additional Fed tightening in the coming months.

Compared to the pound sterling, the yen also fell, but the losses were more limited. However, GBP/JPY rose 0.15% to 182.80 in early afternoon trading, close to multi-year highs hit briefly earlier in the week.

USD/JPY and GBP/JPY are discussed below from a technical analysis perspective, with the understanding that price action can provide important clues about sentiment and insight into near-term direction.

Technical analysis of the USD/JPY pair

USD/JPY extended its advance on Thursday, rising more than 0.3% and approaching reclaiming the psychological handle of 145.00, a key technical barrier to monitor for signs of a near-term directional bias.

With bullish momentum on its side, the path of least resistance is higher for the greenback. This means that the pair is likely to breach upwards soon, an event that might create the right conditions to rise towards 147.50, followed by 148.75.

On the flip side, if USD/JPY fails to clear the 145.00 threshold and turns lower, initial support appears at 142.50. While prices may drop around these levels before bouncing back, a breakdown could attract new sellers into the market, paving the way for a drop towards 140.75.

Technical chart of the USD/JPY pair

USD/JPY chart created with TradingView

Technical analysis of the GBP/JPY pair

The British pound has strengthened strongly against the Japanese yen in recent weeks, driven by the same dynamic that has benefited some G10 currencies: rising yields at home. Focusing on performance, the GBP/JPY is up nearly 5.5% in June, and is trading at its best since December 2015.

While the pound is entrenched in an indisputable uptrend, caution is warranted for two reasons: 1) GBP/JPY is overbought on the monthly, weekly and daily RSI, and 2) the pair is approaching resistance at 184.00, where the upper bounds of the long-term channel line up. With a 50% Fibonacci retracement of the 2007/2011 sell-off.

To obtain technical guidance about the direction, it is important to monitor the price behavior and its reaction around the psychological level of 184.00 in the coming days and weeks. However, if prices decisively break above this barrier, the buying momentum could gain momentum, paving the way for a rise towards 190.00.

On the other hand, if the pair is rejected from the current levels and starts to decline, the sellers can regain the upper hand, opening the door to return to 175.50 in the medium term. This analysis was done on the monthly chart, so any scenario discussed will not appear overnight.

Technical chart for the GBP/JPY pair

GBP/JPY chart made using TradingView