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Japanese yen steadies against US dollar and euro

The Japanese yen has paused from weakening against the US dollar and the euro after pulling back from historical peaks in USD/JPY and EUR/JPY. Will the uptrends resume?

Source: Bloomberg

USD/JPY

USD/JPY remains in an ascending trend channel after failing to break above 145.

144.95 may continue to offer resistance as it is the 161.8% Fibonacci Extension of the late July pullback from 139.39 to 130.39.

It has been tested a few times recently with peaks at 144.97 and 144.99, the latter is a 24-year high. This area could be pivotal for the next big move in USD/JPY.

On the approach to 145 last week, the Bank of Japan made calls to banks in Tokyo asking for a rate check. This has been interpreted by the market to imply that the central bank could be looking to intervene should the price get above 145.

Of course, in the event that they do not intervene if the price trades above there, an aggressive move might be seen. The ascending trend line that currently dissects at 145.90 could be the next potential resistance level to monitor.

The low since the peak at 141.50 may provide support and has provided the base of the 2-week range of 141.50 – 145. A break of this consolidating range might provide a directional indicator.

Source: TradingView

EUR/JPY

EUR/JPY broke the topside of a Pennant Formation in late August and went on to make an 8-year high at 145.65. That level may offer resistance.

Nearby support may lie at the break points of 142.37 and 141.41 or the recent low of 142.30. Further down support might be provided at the break points of 141.41 and 140.00 or the prior lows of 134.95, 133.40 and 132.66.

The price has dropped below the 10-day day simple moving average (SMA) but remains well clear of all other period SMAs that are displaying positive gradients.

This could suggest that near term momentum is stagnant but underlying bullish momentum persists for now. A break of the 2-week range of 142.30 – 145.65 may see momentum build in that direction.

Source: TradingView

This information has been prepared by DailyFX, the partner site of IG offering leading forex news and analysis. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

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