Japanese Yen Technical Outlook : Yen Weakness Remains the Dominant FX Theme Summary

Despite intermittent bouts of US dollar softness at the start of the year, Japanese yen weakness continues to stand out as the dominant FX theme. This remains notable given the sharp rise in Japanese government bond yields, which would normally offer the currency some support. Instead, the yen has continued to underperform, reinforcing bullish trends across USD/JPY and the major JPY crosses.

While USD strength has been uneven elsewhere, USD/JPY remains one of the most constructive venues for expressing it. At the same time, yen weakness appears even more compelling when paired against relatively stronger currencies such as the euro and the British pound.

USD/JPY Outlook: Trend Intact, Key Levels in Focus

USD/JPY continues to trade within a well-defined bullish structure on the daily timeframe. Price has held support along a rising trendline drawn from the December and early January lows, reinforcing trend continuation signals.

The 157.19 decision zone, highlighted previously, has now given way to renewed buying pressure, suggesting that bulls remain in control. However, with the psychologically significant 160.00 level looming, the risk of official commentary or intervention remains a factor, making aggressive breakout chasing less attractive at this stage.

From a tactical perspective, recent pullbacks have created structure to work with. Near-term resistance sits around 158.61, with potential for a retest of former resistance turned support near 158.19. Above that, resistance levels near 158.80 and 159.46 come into view ahead of the broader 160.00 area.

USD/JPY 4 Hour Chart

EUR/JPY Outlook: Bullish Structure Reasserts

EUR/JPY entered 2026 with a clear bullish continuation pattern, breaking higher from a well-defined bull flag and printing fresh all-time highs. Although price pulled back sharply late last week, the move was corrective rather than trend-breaking.

Support near the 183.00 level held cleanly, and price has since rebounded toward the prior high at 185.54. This keeps the broader bullish structure intact.

Near-term focus is on the 185.00 region, where a higher low could form and allow for renewed upside attempts. A sustained hold above this zone keeps the door open for further trend extension. For more conservative positioning, the 184.44 area remains notable, as it previously acted as resistance and has yet to be fully tested as support.

EUR/JPY 4 Hour Chart

GBP/JPY Outlook: Preferred Expression of Yen Weakness

GBP/JPY continues to stand out as the preferred vehicle for expressing yen weakness. The pair has recently delivered a clean hold of higher-low support at the former range resistance zone between 211.42 and 211.59, reinforcing bullish continuation signals.

Price is now testing resistance near 212.60, an area that previously acted as support. A sustained break above this level would shift focus toward 213.50 and then the prior high near 214.30.

For traders favouring pullback-based strategies, support near 212.16 remains key. Holding above this zone would preserve the short-term bullish structure and keep trend-following setups viable.

GBP/JPY 4 Hour Chart

Bottom Line

Japanese yen weakness remains the dominant driver across FX markets, with USD/JPY, EUR/JPY, and GBP/JPY all maintaining bullish technical structures. While the approach toward key psychological levels warrants caution, pullbacks into well-defined support zones continue to offer more favourable risk-reward opportunities than chasing strength. Until there is a clear shift in policy expectations or intervention dynamics, yen weakness remains the path of least resistance.