The Japanese Yen Price Action Setup

The Japanese Yen has managed to surprise and intrigue market participants who were expecting a policy shift from the Bank of Japan (BoJ) with the arrival of Governor Ueda. However, Governor Ueda remains steadfast in his position that a change in policy is not imminent. Despite this, recent comments from Governor Ueda and the Japanese Finance Minister hinted at the possibility of intervention. The reasons behind the Yen’s recent resilience are uncertain, leaving room for speculation about market optimism for a policy adjustment.

Upcoming Rate Hikes and The Japanese Yens’ Outlook

The Japanese Yen is likely to face renewed pressure in the coming month due to expected rate hikes from both the European Central Bank (ECB) and the Bank of England (BoE). Meanwhile, the future actions of the US Federal Reserve are less certain, adding to the pivotal nature of the upcoming weeks for the Japanese Yen as it approaches the third quarter.

EUR/JPY Price Action Setup

EUR/JPY experienced a rally to the psychological level of 150.00 before retracing to 148.80. The daily timeframe indicates a potential formation of a new lower high, suggesting a further downside towards a lower low. The Yen’s resilience will be tested, particularly if Euro bulls return. Despite recent weakness in the Euro due to priced-in hawkish rhetoric and data, a daily close below immediate support at 148.70 could lead to a path towards the 50-day moving average (MA) around the key support area of 147.60. On the other hand, if Euro bulls push forward, resistance at 150.00 and 151.00 levels must be overcome before the focus shifts to the year-to-date (YTD) high at 151.61.

USD/JPY Price Action Setup

The daily chart of USD/JPY shows similarities to EUR/JPY. Both pairs closed with a doji candlestick formation, potentially indicating a mirror image of the EUR/JPY daily close. While USD/JPY has seen a slight increase since the start of the European session, remaining bullish requires avoiding a daily candle close below the previous lower swing high at 137.90. With mixed signals and potential for a breakout, USD/JPY could remain rangebound between the recent swing high around 141.00 and the swing low near the 138.40 level.

AUD/JPY Price Action Setup

AUD/JPY also displayed a doji candlestick pattern on the daily chart. However, the decision by the Reserve Bank of Australia (RBA) to hike rates has reignited the interest of Australian Dollar bulls. The pair has surged higher, surpassing previous highs and encountering resistance around the 93.000 area. This could lead to a short-term pullback towards intraday support at 92.50.

If the RBA rate hike continues to drive momentum, further upside potential exists with the next area of resistance near the 94.00 mark and psychological level of 95.00. It’s worth noting that the 14-day relative strength index (RSI) is approaching overbought territory, raising some caution. However, if a push towards the 94.00 resistance coincides with the RSI entering overbought territory, a pullback may offer a favorable risk-to-reward opportunity for potential shorts.

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