t’s been a brutal quarter for the U.S. Dollar but for the past two months Yen-weakness has kept pace. EUR/JPY and GBP/JPY have both benefited from that dynamic.
By :James Stanley, Sr. Strategist
USD/JPY, EUR/JPY, GBP/JPY talking points:
- As we move into the Q2 close it’s been a brutal outing for the U.S. Dollar.
- Notably USD/JPY has held a pattern of higher-lows, with the 140.00 bounce in April leading to the 142.50 hold, which has since led into a bullish trendline that remain in-play into the close of Q2.
- The fact that DXY has broken down to fresh three-year lows yet USD/JPY remains at higher-lows highlights the deduction of Yen-weakness, which puts focus on EUR/JPY and GBP/JPY.
- I’ll be looking into each of these pairs during the weekly webinar, and you’re welcome to join. Click here to register.
As we move into the second-half of 2025 it’s been a brutal start to the year for the USD. It certainly wasn’t like this on January 1st, however, as the USD had just finished one of its strongest quarters in decades and there were widespread calls for parity in EUR/USD. Perhaps more notably, USD/JPY was flying higher after the carry unwind episode of Q3 the pervious year, which impacted equities and several other risk assets.
The 140.00 level traded briefly in September, just a couple days before the Fed started cutting rates, and then USD/JPY mounted a massive reversal in the 4th quarter as USD strength came back to life.
Both USD/JPY and DXY topped just ahead of the inauguration, and it’s pretty much been a one-way train ever since, at least for the USD. As of this writing with a few hours to go in Q2 trade, the Greenback has sunk to a fresh three-year low. USD/JPY re-tested that same 140.00 level in April that had led to a bounce last September, and since then there’s been a patterning of higher-lows, illustrating the deduction of Yen-weakness that’s remained more prominent elsewhere.
As we move into the second-half of 2025 the big question is whether the Dollar can stage a rebound or whether we’ll see an extension of the trend. It certainly seems as though the Trump administration would like to see a weaker USD, and probably lower rates from the Fed. For USD/JPY, the big question is whether we see that 140.00-140.30 zone finally get taken out after three vigorous bounces from there going back to December of 2023.
USD/JPY Weekly Price Chart
Chart prepared by James Stanley; data derived from Tradingview
USD/JPY Daily
From the daily chart a bullish case can still be made, as we’ve essentially seen a hold of horizontal resistance through most of Q2 around the 148.00 handle, and the other side of that shows diminishing impact of resistance and the build of a bullish trendline. This makes for an ascending triangle formation and if we do see bulls hold the line – that can keep the door open for breakout.
The larger quandary, however, is whether seeking out Yen-weakness would be most advantageous in USD/JPY with a U.S. Dollar that’s seen significant struggle – or whether that could be more opportunistic against a Euro or British Pound that’s shown more relative strength. This is similar to what I had discussed last week in the Thursday article, highlighting bullish structure in both cross pairs as USD/JPY retained a bearish short-term lean following the failure at 148.00.
Click the website link below to read our exclusive Guide to USD/JPY trading in Q2 2025
https://www.forex.com/en-us/market-outlooks-2025/q2-usd-jpy-outlook/
USD/JPY Daily Price Chart
Chart prepared by James Stanley; data derived from Tradingview
EUR/JPY 170.00
The Euro has been really strong in Q2 especially against the U.S. Dollar; but the single currency has also shown very clear preference to the Japanese Yen, as well. The past month has been particularly strong as the pair was finally able to resolve resistance at the Fibonacci level of 163.38, leading to a sizable breakout in June that has allowed for EUR/JPY to make a run at the 170.00 psychological level.
EUR/JPY Monthly Price Chart
Chart prepared by James Stanley; data derived from Tradingview
EUR/JPY Weekly
Chasing the pair at current levels can be seen as challenging given how developed the move has already become, but that does keep the door open for trend continuation scenarios, with higher-low support potential taken from prior resistance. From the weekly chart, we can get a better view of just how developed the near-term move is as price angles closer and closer to the 170.00 level.
EUR/JPY Weekly Chart
Chart prepared by James Stanley; data derived from Tradingview
EUR/JPY Shorter-Term Strategy
So far, shorter-term structure has retained a bullish posture. The 168.74 support level I looked at last Thursday has held another test, and there’s now higher-low support potential at the short-term resistance from that article around 169.27.
EUR/JPY Four-Hour
Chart prepared by James Stanley; data derived from Tradingview
GBP/JPY
In GBP/JPY, it’s the long-term zone that remains in-play. The 198.08 level held resistance for four consecutive months into the end of last year and the open of this one. The pullback from that then led to three consecutive months of resistance at the bottom of the zone at 193.61, until this month’s breakout, with 198.08 coming back into hold the highs yet again.
GBP/JPY Monthly Chart
Chart prepared by James Stanley; data derived from Tradingview
GBP/JPY Weekly
The 193.61 level became support earlier in June and as Yen-weakness took over again, GBP/JPY rallied all the way up to the top of the zone at 198.08, which is where turbulence has started to show.
GBP/JPY Weekly Chart
Chart prepared by James Stanley; data derived from Tradingview
GBP/JPY Shorter-Term
More recently, it’s been the 198.50 level that’s given bulls problems. Bulls have put in some effort but, so far, they’ve failed to leave that level behind. At the start of this week, a deeper pullback has shown with the 197.71-197.82 zone coming back into the picture. As of this writing, bulls are putting up a fight – but this can be justified as a short-term lower-low that keeps the door open for a deeper pullback. In that scenario, attention then goes to support potential at 196.85 after which 196.19-196.38 comes back into the picture. Notably, this was resistance for an ascending triangle that led to that breakout earlier in July.
If bulls can hold on to short-term higher lows around the 197.75 area, then 198.08 becomes a point of interest again for shorter-term higher-low support in bullish continuation scenarios. That keeps the door open for another test of 198.50, and perhaps a breakout setup on that next test of that zone that, so far, has been problematic for buyers.
GBP/JPY Four-Hour Price Chart
Chart prepared by James Stanley; data derived from Tradingview
— written by James Stanley, Senior Strategist
https://www.forex.com/en-us/news-and-analysis/usd-jpy-trendline-test-ii-usd-jpy-eur-jpy-gbp-jpy/
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