BOJ Impacts JPY: USD, EUR, AUD Strength and Key Levels

BOJ impacts on JPY, the resilience of USD, EUR, and AUD crosses are under scrutiny as key levels are analyzed following the policy decision.

In recent price action, the US Dollar (USD), Euro (EUR), and Australian Dollar (AUD) have maintained their strength against the Japanese Yen (JPY), with the uptrend showing resilience despite some slowdowns. Traders now focus on crucial levels to assess the impact of the Bank of Japan’s (BOJ) recent policy decisions on these JPY crosses.

BOJ Impacts JPY: USD, EUR, AUD Strength and Key Levels in Focus

During its last meeting, the Bank of Japan’s decision to maintain its ultra-loose monetary policy settings reaffirmed the ongoing weakness in the Japanese yen. As expected, this move led to a partial reversal of JPY’s recent gains.

The persistence of the BOJ’s ultra-easy monetary policy stance diverges from the more hawkish positions adopted by central banks in other countries. Furthermore, the global economic growth outlook has largely converged, erasing any significant relative growth advantage that could have supported a substantial appreciation of the JPY. Unless there is a shift away from hawkish policies by global central banks or an increase in hawkishness by the BOJ, the path of least resistance for the yen remains sideways to downward. 

Market attention now centers on whether Japanese authorities will intervene in the forex market, given USD/JPY’s entry into the 2022 intervention-triggering range. Skeptics argue that unless the underlying factors driving the currency market shift in favor of the yen, intervention may only temporarily stall the bearish trend of the Japanese currency without fundamentally reversing it.

USD/JPY

Despite a recent slowdown in upward momentum, USD/JPY continues to hold above critical support levels. Since July, the currency pair has traded above the 200-period moving average on the 240-minute charts. A break below this moving average, coinciding with the mid-September low of 146.00, could signal that the two-month-long uptrend is in jeopardy. A further decline below the early-September low of 144.50 would put the bullish bias at risk. Conversely, on the upside, USD/JPY is approaching a formidable resistance level at the 2022 high of 152.00. Beyond that, traders will closely monitor the 1990 high of 160.35.

EUR/JPY

While the recent rally in EUR/JPY has stalled, indications suggest that the broader uptrend remains intact. Two key factors support this view: the currency pair continues to trade above the Ichimoku cloud, and the 89-day moving average still points upward. Furthermore, EUR/JPY has not decisively breached vital pivot support levels, including the June high and the late-August low, which range from approximately 156.50 to 158.00.

AUD/JPY

AUD/JPY recently broke above a minor resistance level, represented by a horizontal trendline dating back to August at 95.00. This breakout suggests that immediate downward pressure has subsided. The currency pair rebounded from converged solid support, including the 89-day moving average, the February high, and the lower edge of the Ichimoku cloud. Despite weakness since June, AUD/JPY continues to trade within a rising pitchfork channel established at the end of 2022. A potential move above the initial resistance at the July high of 95.85 could pave the way for a test of the June high at 97.70.

Traders and investors will closely monitor these critical levels in the USD/JPY, EUR/JPY, and AUD/JPY pairs to gauge the ongoing strength of the Japanese yen against major currencies in the coming weeks.

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