Home ForexForecasts USD/JPY, EUR/JPY and GBP/JPY are below decade highs

USD/JPY, EUR/JPY and GBP/JPY are below decade highs

by SuperiorInvest
  • The Japanese Yen is the worst performing major currency pair today and so far this year!
  • The New Year’s Day earthquakes have cast doubt on a first-half rate hike by the BOJ, while other countries are seeing strong economic data and less cautious comments from central bankers.
  • GBP/JPY looks particularly strong, but both USD/JPY and EUR/JPY remain in clear uptrends.

Despite the general risk aversion today, it hasn’t received much supply; in fact, it is actually the worst performing major currency on the day and year, behind even the hardest hit.

While other currencies have been supported by better-than-expected economic data (UK CPI and US retail sales) or less dovish comments from key central bankers (ECB President Lagarde), the yen has received little news or specific news from each country. data from recent times.

Instead, traders appear to be recognizing the opportunity cost of holding a currency with current zero yields, and expectations of BOJ interest rate hikes in the first half of the year have taken a big hit after the day’s earthquakes. New year. In the wake of the disaster, BOJ officials have rejected expectations of imminent rate hikes, arguing instead that the economy may need more stimulus as the country rebuilds.

Looking ahead, there is little Japan-specific economic data scheduled until the BOJ meeting on Tuesday, January 23, although the BOJ has essentially openly stated that it will not make any changes until after the spring wage negotiations at the earliest. Therefore, technical and inter-market analysis are likely to be the most important drivers for yen crosses in the coming days.

Japanese Yen Technical Analysis – USD/JPY Daily Chart

Fountain: TradingViewStoneX

If we look at USD/JPY first, we can see that 2024 has not been good for the Japanese yen. USD/JPY has only fallen three days so far this year, gaining over 700 pips (5%+) since the New Year’s Eve close. Looking ahead, USD/JPY has regained most of its November-December sell-off, but the 78.6% Fib retracement at 149.40 still looms as the last hurdle before the pair may retest its 33-year high at 152.00.

Japanese Yen Technical Analysis – EUR/JPY Daily Chart

EUR/JPY-Daily Chart

Fountain: TradingViewStoneX

looks relatively similar to the aforementioned USD/JPY, with rates rising steadily since we changed our calendars to 2024. In its case, EUR/JPY broke out of a sideways consolidation pattern last week and then proceeded to bounce off previous resistance turned into medium. to 158.60 to start this week’s trading. Going forward, the path of least resistance remains up for now, with potential resistance at 162.00 (the 78.6% Fibonacci retracement) and 164.25 (the 15-year high).

Japanese Yen Technical Analysis: GBP/JPY Daily Chart

GBP/JPY-Daily Chart

Fountain: TradingViewStoneX

Last but not least, the ever-volatile crossover looks perhaps the most bullish of all. The GBP/JPY pair has already almost completely reversed its November-December decline, putting the eight-year high at 188.75 within striking distance later this week. Despite the rally of almost 900 pips so far this year, GBP/JPY is still not overbought on the 14-day RSI, suggesting that a move to 190.00 or higher could be in play next week if the resistance at 188.75 gives way.

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