Japanese Yen Price Action Setups: EUR/JPY, USD/JPY, AUD/JPY

• The Yen Has Remained Resilient of Late Despite a Dovish BoJ. Optimism Over Policy Shift or Fear of Intervention?
• Doji Candlestick Close for EURJPY and USDJPY Hints at Further Downside.
• AUDJPY Hits December 2022 Highs Following RBA Hike. Where to Next?

JAPANESE YEN BACKDROP

The Japanese Yen has continued to both surprise and intrigue as market participants do not seem to be getting the message from the Bank of Japan (BoJ). Market participants had hoped for a swift change in policy following the arrival of Governor Ueda, however the Governor continues to be steadfast in his rhetoric and assessment that a change is not imminent.

Comments in this morning once more indicate the Governors position, as he stated “We’re going to continue QQE until achievement of our inflation target. Inflation expectations have remained low because of prolonged zero inflation and deflation.” The recent Yen recovery is thus surprising, however last week we heard comments from both Governor Ueda and the Japanese Finance Minister around the currency and exchange rate which hinted at the potential for intervention.

We did of course see intervention from the BoJ in October 2022 when USD/JPY reached the 150.00 handle. It is rather difficult to tell whether this is the reason for the recent resilience by the Japanese Yen or are markets still optimistic of a shift or tweak in policy?

The Yen is likely to face renewed pressure this month as rate hikes is expected from both the ECB and the BoE, while US Federal Reserve picture looks a little less certain. The weeks ahead could prove pivotal for the Japanese Yen as we head toward Q3.

EURJPY

EUR/JPY Daily Chart

EURJPY rallied into the psychological 150.00 level yesterday before retreating to a low of 148.80 today. On the daily timeframe a candle close here would see a new lower high printed signaling the potential for further downside in search of a lower low.

It will be interesting to see whether the Yen is able to sustain its resilience particularly if we see a return of Euro bulls. The Euro hasn’t been particularly strong of late with the majority of hawkish rhetoric and data likely priced in already and thus resulting in some short-term Euro weakness. A daily candle close below immediate support around 148.70 could clear a path toward the 50-day MA, which hovers near a key support area at 147.60.

Alternatively, a push by Euro bulls has to contend with the 150.00 handle first before looking toward resistance at the 151.00 handle before the YTD high comes into focus at 151.61.

Key Levels to Keep an Eye On:

Support levels:

• 148.70
• 147.60
• 145.50

Resistance levels:

• 150.00
• 151.00
• 151.61

USDJPY

USD/JPY Daily Chart

From a technical perspective, the daily chart for USD/JPY looks eerily similar to EUR/JPY. Yesterday’s daily candle closed as a doji candlestick in what could be a mirror image of the EURJPY daily close. USDJPY however has looked to tick higher since the start of the European session as the Dollar Index found support around the 103.80 handle.

Overall USDJPY remains bullish without a daily candle close below the 137.90 handle (previous lower swing high). Mixed signals here and similar to EURJPY as we wait for a potential breakout. We could very well see USDJPY rangebound for now between the recent swing high around 141.00 and the swing low around the 138.40 handle.

Key Levels to Keep an Eye On:

Support levels:

• 138.40
• 137.90
• 137.34 (200-day MA)

Resistance levels:

• 140.00
• 141.00
• 142.13

AUDJPY

AUD/JPY Daily Chart

The AUDJPY chart saw a similar doji candlestick close on the daily yesterday but the decision to hike rates by the RBA has reignited the interest of Australian Dollar bulls. The pair has pushed higher taking out yesterday’s highs before rallying into resistance around the 93.000 area. Given that we are at a resistance level and have printed a higher high we could very well be in for a short-term pullback toward intraday support around 92.50.

Given the RBA rate we could very well push higher here with the next area of resistance resting around the 94.00 mark, before the psychological 95.00 area comes into focus. The only apprehension I do have regarding further upside would be that the 14-day RSI is approaching overbought territory. However, a push to the resistance at 94.00 could line up perfectly with the RSI entering overbought territory and could result in a pullback, offering would-be-shorts a better a risk-to-reward opportunity.