USD/JPY, EUR/JPY Market Insights
- The USD/JPY pair maintains its bullish recovery, currently testing a significant support level at 151.95, previously identified as resistance.
- EUR/JPY is facing resistance after a recent test of the 160.00 threshold, as bearish sentiment has emerged, indicated by a doji candlestick on the daily chart.
In late November, the Japanese Yen demonstrated remarkable strength, particularly evident during Thanksgiving week. Early indications in USD/JPY revealed a troubling divergence where the USD reached a new two-year high on November 22nd, while USD/JPY remained in a lower-high formation, just shy of the 155.00 mark.
This lower-high pattern culminated in a bearish trendline, contributing to a descending triangle structure that found support at the 61.8% retracement level, coinciding with a previous high noted at the 76.4% retracement. Although my initial focus was on USD/JPY, I highlighted the potential for EUR/JPY to offer clearer opportunities for Yen strength scenarios. However, it wasn’t long before sellers took control in both pairs.
User sentiment shifted quickly, with USD/JPY breaking through several key support levels, including 151.95, 150.77, and finally, the significant psychological level at 150.00. Notably, the downward momentum began to wane below this threshold, paving the way for potential rebounds.
As of now, the price action has established a series of higher-highs and higher-lows for over a week. More importantly, this movement has occurred around the 151.95 support level, complemented by the 200-day moving average, signaling a determined stand by buyers.
USD/JPY Four-Hour Price Chart
USD/JPY Outlook
Short-term indicators suggest further bullish potential for USD/JPY. However, questions linger regarding the endurance of bearish sentiment in the market.
EUR/JPY Analysis
Amid ongoing discussions around the Federal Reserve's potential for rate cuts in the upcoming year, the European Central Bank's stance appears more stable.
As I have emphasized recently, EUR/JPY might provide a more suitable landscape for capitalizing on Yen strength. The daily chart indicates a continuation from the previous trendline bounce, although sellers have strongly reacted, leading to a doji formation and extended wicks from the last trading day. Today’s attempts at a bullish reversal have struggled, hitting a resistance level at the 160.55 Fibonacci point, just beneath yesterday’s high.
EUR/JPY Daily Chart
EUR/JPY Short-Term Perspective
Currently, it’s premature to declare a bearish trend resurgence. The low set today has held at the 159.10 Fibonacci level, forming a higher-low compared to yesterday’s action. This implies a consolidation phase more than any definitive directional movement.
The impact of the 160.00 level could be critical in maintaining the current structure; if it reinforces another lower-high, selling pressure may manifest. On the support side, the swing low from yesterday at 158.65 represents a significant threshold that bears must breach to affirm a lower-low. Falling below this point would lead the market towards a prior resistance zone between 158.04 and 158.24, where sellers could potentially ignite larger bearish movements.
