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Uncovering the Latest Bearish Signals: Prime Opportunities on USD/JPY, EUR/JPY, GBP/JPY

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JAPANESE YEN OUTLOOK – USD/JPY, EUR/JPY, GBP/JPY

  • The yen (JPY) weakens across the board following dovish comments from a key Bank of Japan official.
  • Indications that the BoJ will not hike aggressively when it exits negative rates should be bearish for the Japanese currency
  • This article discusses the near-term technical outlook for three yen pairs: USD/JPY, EUR/JPY and GBP/JPY

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The Japanese yen (JPY) weakened across the board on Thursday following cautious remarks by Bank of Japan’s Executive Director Seiichi Shimizu. Addressing the lower house budget committee in parliament, Mr. Shimizu indicated that the BoJ would maintain an accommodative stance for an extended period, even after abandoning negative borrowing costs, which have been in place since 2016.

The dovish statements suggest that the BoJ’s exit from its ultra-loose position will not likely result in multiple rate hikes, as seen in other key economies recently, but rather only a few scattered ones. In theory, this could limit the yen’s recovery potential in the coming months, making it less attractive in terms of its yield differential versus its major peers.

Leaving fundamental analysis aside for now, the remainder of this article will focus on the technical outlook for three important Japanese yen pairs: USD/JPY, EUR/JPY and GBP/JPY. We’ll also assess key price thresholds that should be on every currency trader’s radar, discussing their potential roles as support or resistance levels in the upcoming trading sessions.

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USD/JPY FORECAST – TECHNICAL ANALYSIS

USD/JPY rallied strongly on Thursday, breaking above a key ceiling at 148.90 and reaching its best mark since November last year. If upward momentum continues in the coming days, resistance looms near the psychological 150.00 level. On further strength, all eyes will be on the 152.00 area.

On the flip side, if sellers return unexpectedly and spark a pullback, 148.90 should be the first line of defense against a bearish attack. Further losses beyond this technical floor could draw attention first to 147.40, and then to 146.00 if weakness persists for long.

USD/JPY TECHNICAL CHART

USD/JPY Chart Created Using TradingView

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Change in Longs Shorts OI
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Weekly 6% 11% 10%

EUR/JPY FORECAST – TECHNICAL ANALYSIS

EUR/JPY soared on Thursday, breaching short-term trendline resistance at 160.00 and approaching another key barrier stretching from 161.15 to 161.75. Bears must fiercely defend this ceiling; a failure to do so could trigger a rally toward last year’s highs near the 164.00 handle.

In the event of a bearish reversal, support emerges at 159.70. Below this point, the 100-day simple moving average becomes the next potential technical floor for the market, succeeded by the 50-day simple moving average at 158.30. Further down, the focus shifts to 157.50.

EUR/JPY TECHNICAL CHART

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EUR/JPY Chart Created Using TradingView

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GBP/JPY FORECAST – TECHNICAL ANALYSIS

After a moderate pullback in late January, GBP/JPY has mounted a strong comeback in recent days, steadily approaching its multi-year highs set around 189.00. Bulls are likely to encounter stiff resistance around these levels, yet a breakout could propel the pair towards 190.50.

On the other hand, if the bullish impetus fades and prices turn lower, initial support is positioned at 185.50. While GBP/JPY may stabilize upon testing this region ahead of a possible rebound, a breakdown could prompt a retracement towards 184.20, close to the 100-day and 50-day simple moving averages.

GBP/JPY TECHNICAL CHART

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GBP/JPY Chart Created Using TradingView

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When it comes to currency trading, being aware of market trends and signals is crucial for success. One of the most important indicators to consider is the bearish signal, which represents a potential decline in the value of a currency. In this article, we will delve into the latest bearish signals on three major currency pairs – USD/JPY, EUR/JPY, and GBP/JPY – and uncover prime opportunities for traders to take advantage of.

USD/JPY: A Prime Opportunity for Bearish Traders

The USD/JPY currency pair represents the exchange rate between the US dollar and the Japanese yen. This pair is often referred to as the “ninja” pair, as both the US dollar and the Japanese yen are considered to be safe-haven currencies. However, recent market trends have revealed a strong bearish signal on this pair, making it a prime opportunity for bearish traders.

One of the key reasons behind this bearish signal is the continuous decline in the US dollar. The US dollar has been facing significant pressure due to a variety of factors, including the current economic uncertainty caused by the COVID-19 pandemic and the high unemployment rate in the US. This has resulted in a decrease in demand for the US dollar and a subsequent decline in its value.

At the same time, the Japanese yen has been gaining strength, driven by positive economic data and the country’s successful handling of the pandemic. This has led to a situation where the USD/JPY pair is experiencing a downward trend, presenting lucrative opportunities for bearish traders.

EUR/JPY: Riding the Bearish Momentum

The EUR/JPY currency pair represents the exchange rate between the euro and the Japanese yen. This pair is heavily influenced by the two economies’ performance, and in recent times, the euro has been showing significant strength compared to the Japanese yen. As a result, the EUR/JPY pair has witnessed a strong bearish signal, which traders can take advantage of.

The primary reason behind this bearish signal is the improving economic conditions in the Eurozone. The Eurozone has been recovering from the economic downturn caused by the pandemic, and this has led to an increase in demand for the euro. At the same time, the Japanese yen has been losing its safe-haven appeal due to a slowdown in the country’s economic recovery. This has resulted in a decline in the value of the Japanese yen, driving the EUR/JPY pair further into a bearish trend.

GBP/JPY: Identifying Bearish Patterns

The GBP/JPY currency pair represents the exchange rate between the British pound and the Japanese yen. This pair is known for its high volatility, making it an attractive choice for traders. In recent times, the GBP/JPY pair has exhibited a strong bearish signal, presenting prime opportunities for traders to capitalize on.

One of the key factors behind this bearish signal is the ongoing Brexit negotiations and their impact on the British pound. The uncertainty surrounding the outcome of the negotiations has caused significant fluctuations in the British pound’s value, resulting in a decline against the Japanese yen. Moreover, the Bank of Japan’s negative interest rate policy has also played a role in strengthening the Japanese yen, further adding to the bearish momentum on the GBP/JPY pair.

Taking Advantage of Bearish Signals – Tips for Traders

Now that we have explored the bearish signals on USD/JPY, EUR/JPY, and GBP/JPY, let’s take a look at some practical tips for traders looking to capitalize on these opportunities.

– Keep an eye on economic data and news: Economic data releases and market news can have a significant impact on currency pairs. Stay informed and be ready to make quick trading decisions based on market sentiment.

– Use technical analysis: Utilize technical analysis tools and indicators to identify bearish patterns and trends. This will help you make well-informed trading decisions and identify potential entry and exit points.

– Diversify your portfolio: While bearish signals on specific currency pairs can present attractive opportunities, it is always advisable to have a diversified trading portfolio to minimize risks.

– Have a risk management plan: Bearish signals often come with high volatility, which can lead to significant losses if not managed properly. Have a solid risk management plan in place to protect your investments.

In conclusion, being aware of bearish signals on currency pairs is crucial for successful trading. By keeping an eye on market trends and utilizing technical analysis tools, traders can identify prime opportunities to enter into bearish trades on pairs like USD/JPY, EUR/JPY, and GBP/JPY. However, it is essential to have a well-thought-out trading plan and risk management strategy to ensure long-term success in currency trading. Happy trading!

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