The Weakening Yen Has Implications For Forex Markets

Japanese Yen Weakness Persists Post-BOJ Meeting

The recent Bank of Japan (BOJ) meeting confirmed the ongoing weakness in the Japanese yen (JPY), leading to a gradual decline in its value. Despite a slight pullback, the uptrend in USD/JPY, EUR/JPY, and AUD/JPY remains intact. Forex traders are closely monitoring key levels in these JPY crosses to navigate their positions.

BOJ's Persistent Monetary Policy and Global Trends

The BOJ's commitment to an ultra-loose monetary policy diverges from the more hawkish stance adopted by central banks worldwide. Additionally, the global growth outlook has stabilized, erasing any relative growth advantage for JPY. This suggests that, unless central banks globally shift towards a less hawkish approach or the BOJ becomes more hawkish, the yen's path of least resistance remains sideways to downward. Forex markets are particularly interested in potential Japanese authorities' interventions, as USD/JPY is now trading near levels that triggered intervention in 2022.

USD/JPY Technical Analysis

Examining the technical charts, USD/JPY is showing signs of slowing upward momentum. However, it has managed to stay above critical support levels, including the 200-period moving average. A breach below this moving average, aligned with the mid-September low at 146.00, would raise concerns about the ongoing two-month-long uptrend. Further downside risk would emerge if the early-September low of 144.50 is breached. On the upside, a significant resistance level lies at 152.00, which corresponds to the 2022 high, with 160.35 as the next target above that.

EUR/JPY Analysis

The rally in EUR/JPY has encountered a recent stall, but the broader uptrend remains intact. This is evidenced by the pair's ability to hold above the Ichimoku cloud on the daily chart and the 89-day moving average, signaling the continuation of the upward trend. Critical pivot support levels, such as the June high and the late-August low (approximately 156.50-158.00), have not been decisively broken. Forex traders are keeping a close eye on these levels for potential entry and exit points.

AUD/JPY Showing Strength

AUD/JPY demonstrated strength by breaking above a minor resistance level at 95.00 last week. This development indicates that immediate downward pressure has diminished. Furthermore, the pair rebounded from strong converged support, including the 89-day moving average, the February high, and the lower edge of the Ichimoku cloud on the daily charts. Despite some weakness since June, AUD/JPY has remains within a rising pitchfork channel since the end of 2022. Traders are monitoring the July high at 95.85 as a crucial resistance level, with the potential to pave the way toward the June high at 97.70.

Navigating Forex Trends Amid BOJ Policy and JPY Crosses

Forex traders should closely observe the ongoing trends in USD/JPY, EUR/JPY, and AUD/JPY in light of the BOJ's continued ultra-loose monetary policy and the global central banks' hawkishness. The weakening yen has implications for Forex markets, as traders consider the potential for Japanese authorities' interventions and how they may impact the JPY's bearish trend. Technical analysis and key support and resistance levels provide valuable insights for Forex traders navigating these JPY crosses in the current market environment.