Japanese Yen Hits Trendline Resistance. Focus Moves to Earnings, Trade


Japanese Yen Technical Analysis Talking Points:

  • The Yen market is overwhelmingly driven by fundamentals now
  • However, the Dollar’s bounce has yet to break back above its former uptrend
  • Support for USDJPY looks very firm though

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The Japanese Yen wilted last week as the markets moved to price out the prospect of military escalation between the United States and Iran.

Clearly the fundamentals are driving this market now, with investors taking back from the Yen what they gave it in the immediate aftermath of the lethal US airstrike on key Iranian General Qassim Soleimani. With perceived haven assets like the Japanese currency now in less-urgent demand the global market overall is looking with hope to both the looming US corporate earnings season and this week’s scheduled signing of a phase one trade deal between Washington and Beijing.

However, technically speaking it is notable that the USDJPY uptrend line from late August, so conclusively shattered by December 30’s Iran-related plunge, still seems to be forming resistance to the subsequent recovery.

US Dollar Vs Japanese Yen, Daily Chart

That line continues to cap the market on a daily closing basis but is very close at hand and seems unlikely to do so if risk appetite revives further. A break above it will see May 21, 2019’s high of 110.67 back in bullish focus, where it will remain for as long as that uptrend can hold. However, there seems no great rush to get the pair back up there and this week’s risk events could be crucial to its chances.

Support looks firm in a broad band some way below the market between the first and second Fibonacci retracements of the rise up from August’s lows to the peaks of early December.

Meanwhile the New Zealand Dollar has arguably weathered last week’s risk-off storm better than did its US big brother. NZDJPY’s uptrend channel has remained clearly unbroken, with the cross now attempting to break out of the trading range established within it.

New Zealand Dollar Vs Japanese Yen, Daily Chart

December’s top of 73.50 is an eight-month peak, but it’s also one that didn’t hold for long when it was made. The market quickly traded back into range. A repeat performance is something to be on watch for as the market climbs back toward that figure.

Join our analysts for live, interactive coverage of all major Japanese economic data at the DailyFX Webinars. We’d love to have you along.

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!

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