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Market update: Japanese yen retests 150 ahead of BOJ; USD/JPY, GBP/JPY, EUR/JPY setups

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USD/JPY is once again testing the psychological 150 mark; risk of intervention is growing amid speculation of a tweak in BOJ YCC policy. What is the outlook and key levels to watch in select JPY crosses?


original-size.webpSource: Bloomberg


 Manish Jaradi | IG Analyst, Singapore | Publication date: Thursday 26 October 2023 07:44

The Japanese yen is retesting the psychological 150 mark against the US dollar ahead of the Bank of Japan (BOJ)’s policy meeting next week.

USD/JPY is within the zone that prompted the BOJ to intervene last year, a possibility highlighted in September. Japanese finance minister Shunichi Suzuki said on Thursday authorities are closely watching moves with a sense of urgency and warned investors against selling the yen.

USD/JPY daily chart


original-size.webpSource: TradingView

BOJ’s ultra-easy monetary policy contrasts with its peers, where central banks have tightened monetary policy at an unprecedented pace to tackle inflation, pressuring the yen. Rising global yields and inflation have pushed Japanese yields higher. This has put pressure on the BOJ to tweak its yield curve control (YCC) policy, which the central bank uses to manage yields. The Japanese central bank tweaked the YCC policy a few months ago to allow for greater flexibility, and it could further adjust the policy when it meets next week.

USD/JPY 240-minute chart


original-size.webpSource: TradingView

USD/JPY: flirts with psychological 150

USD/JPY is once again retesting the psychological 150 mark, slightly below the 2022 high of 152.00. There is no sign of a reversal of the uptrend – the pair continues to make higher highs and higher lows, albeit gradually. USD/JPY continues to hold above the 200-period moving average (at about 148.75) on the 240-minute chart, around Tuesday’s low of 149.25. A break below 148.75-149.25 would confirm that the upward pressure had faded in the interim. For a more sustained consolidation to occur, USD/JPY would need to crack under the early-October low of 147.35. On the upside, a decisive break above 150.00-152.00 could open the door toward the 1990 high of 160.35.

GBP/JPY daily chart


original-size.webpSource: TradingView

GBP/JPY: bullish move ahead?

GBP/JPY has gone sideways in recent days but continues to hold under a significant converged hurdle at the mid-October high of 183.75, and the upper edge of the Ichimoku cloud on the daily chart. As highlighted in the previous update. The recent correction lower since August is a sign of consolidation within the broader uptrend, and not necessarily a sign of reversal. The cross has major support at the July low of 176.25, which could limit extended weakness.

EUR/JPY: at the top end of the range

EUR/JPY is back at the top end of the recent range of 154.00-160.00. Importantly, despite the consolidation, the cross continues to hold above a vital cushion on the 89-day moving average, coinciding with the lower edge of the Ichimoku cloud on the daily charts, near the early-October low of 154.50. This support area is strong and could be tough to crack, especially in the context of the broader uptrend following the break earlier this year above strong resistance at the 2014 high of 149.75.

EUR/JPY daily chart


original-size.webpSource: TradingView




This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

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