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Market Insights

Trading insights: USD/JPY, EUR/JPY climb with dovish BoJ

Trading insights: USD/JPY, EUR/JPY climb with dovish BoJ

Japanese Yen price outlook:

  • USD/JPY regains confidence on dovish BoJ
  • Bank of Japan keeps rates in negative territory
  • EUR/JPY runs into psychological resistance, holding firm at 158.00

Bank of Japan (BoJ) keeps rates in negative territory, Japanese Yen falls

USD/JPY is currently trading above the critical level of prior resistance at 148.00, which has held steady throughout this week. After a brief correction in yesterday’s session, the decision made by governor Ueda at this morning's BoJ rate decision allowed the pair to recover all losses from the previous session.

As the Federal Reserve maintains its hawkish narrative, suggesting that high rates will remain in place for the foreseeable future, the Bank of Japan has refrained from moving away from negative rates.

With interest rate differentials driving demand for the greenback against the Yen throughout the year, monetary policy remains a prominent driver of price action for USD/JPY.

USD/JPY weekly chart

USDJPY

Chart prepared using TradingView

USD/JPY technical levels

From a technical standpoint, the latest round of central bank meetings has pushed price action above the November 2022 high of 147.57, now providing support for the imminent move.

Although both currency pairs are expected to face fresh headwinds this week, a break of 148.00 could see prices retest 150.00.

EUR/JPY technical analysis

Over the past six weeks, the Euro Yen currency pair has been trading in a narrow range of support and resistance between the levels of 156.00 and 159.00. With the formation of a doji candle on the weekly chart, the muted price action has highlighted an important zone that currently remains intact.

As prices search for a clear directional bias, the 158.00 psychological level has formed a firm layer of resistance for the short-term move, while the 50 - day MA provides temporary support at 157.455.

EUR/JPY daily chart

EURJPY
Chart prepared on TradingView

With both bulls and bears currently struggling to gain traction, a clear break in either direction could drive momentum, pushing the pair to the longer-term levels mentioned above. If prices fall below the 50 - day MA and break current trendline support, the 156.00 may come into play, while a move above 158.00 opens the door for the August high at 159.763.

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Not investment advice. Past performance does not guarantee or predict future performance.