Japanese yen price action setups: AUD, EUR, GBP, USD

Short-term downward momentum in the Japanese yen remains intact ahead of Friday’s US core PCE price index data. Recent strong US data have triggered a dramatic repricing higher in Fed rate expectations and the market will be watching for cues on the US Federal Reserve’s preferred inflation gauge.

Still, technical charts suggest it may be too soon to conclude if the Japanese currency has embarked on a depreciation trajectory beyond intraday timeframes, at least against the US dollar.

USD/JPY – plenty of resistance

USD/JPY (大口） is hovering around the vital resistance area at 135.00-138.00, including the early-January high, the 200-day moving average, coinciding with the upper edge of the Ichimoku cloud on the daily charts, not too far from the December high of 138.20. As highlighted in last week’s update, the trend on intraday charts is still up and there is no sign of reversal just yet.

However, the trend on the daily chart (relevant for swing/positional traders) is down and the most recent rebound is a consolidation within the broader weakness. USD/JPY (大口） would need to clear the above resistance area for the multi-week downward pressure to fade.

USD/JPY daily chart

EUR/JPY – flirting with the 200-DMA

EUR/JPY has been flirting with the 200-day moving average recently and is now at the top end of the past two months' range. The cross faces stiff resistance at the end-December high of 143.00, the mid-2022 highs of 144.25 followed by the December high of 146.75.

While the price action since mid-2022 has been quite choppy, zooming out to higher timeframes (beyond the daily timeframe), the broader trend for EUR/JPY has been up. However, given the tough barrier the cross currently faces, it is unclear if EUR/JPY is ripe to resume the broader bullish bias or continue within the range for a prolonged period.

EUR/JPY daily chart

AUD/JPY – at a major intersection

AUD/JPY’s drop in December below a slightly upward-sloping trendline from August triggered a break from a bearish topping pattern. However, the cross failed to extend losses subsequently, finding support at the May low of 87.45. The price action since then has been choppy with a slight upward bias.

AUD/JPY now faces a strong ceiling on the 200-day moving average, the mid-December high of 93.35, roughly coinciding with the upper edge of a rising channel from December. The cross would need to break above the converged cap to resume the uptrend from 2020.

AUD/JPY daily chart

GBP/JPY – At the lower end of the well-established range

GBP/JPY has been around the lower end of the range since early 2022. In recent weeks, GBP/JPY has struggled to break past a stiff converged barrier, including the January high of 161.80, coinciding with the upper edge of the Ichimoku cloud on the daily charts, the 200-day moving average, near the November low of 163.10.

The November low coincides roughly with a 50% retracement of the bearish candle created on December 20, which can offer major resistance. The cross needs to clear the converged resistance of 161.50-163.50 for the multi-month range to continue.

GBP/JPY daily chart