The recent release of the Bank of Japan’s summary of opinions has sparked discussions among market participants. The bearish comments from BoJ policymakers have raised concerns about the future trajectory of the Yen. However, Deputy Governor Shinichi Uchida’s efforts to soften Governor Ueda’s aggressive remarks have helped stabilize the markets. The BoJ’s projection of reaching the inflation target by the second half of 2025 presents an intriguing scenario for investors. While central banks globally are cutting rates, the BoJ’s plan to tighten and raise rates could position the Yen strongly next year.
Geopolitical concerns have the potential to bolster the Yen’s position in the market. The safe haven appeal of the Yen, alongside the US Dollar and Swiss Franc, might be divided in the coming months. This division could impact the Yen’s gains against the Dollar while benefiting it against the Euro and GBP. Investors should closely monitor these geopolitical developments to assess the Yen’s future outlook.
From a technical perspective, the USD/JPY pair has rebounded strongly and formed an imperfect morning star candlestick pattern. This pattern typically signals a bullish move, with the potential for a return to the 150.00 level in the coming days. However, an H4 candle closing below the recent lower swing high around 144.25 could invalidate the bullish outlook, leading to a retest of the psychological 140.00 level. Resistance levels are identified at 148.00 and 150.00, with immediate support at 145.00, 144.00, and 141.65.
The GBP/JPY chart mirrors the USD/JPY pattern, trading just above the crucial support level at 185.00. While bulls currently control the market, a break below 183.30 could invalidate the bullish structure, potentially bringing the pair closer to recent lows around 175.00. Resistance levels are seen at 187.65 and 190.00, with support levels at 185.00, 183.30, and 180.00.
Similar to USD/JPY and GBP/JPY, the EUR/JPY chart displays an imperfect morning star candlestick pattern. The pair retested the support area around 159.00 before bouncing back to 159.66. A candle close below the recent lower swing high at 157.50 could invalidate the current bullish trend, potentially leading to a retest of recent lows at 154.40. Immediate resistance levels are identified at 160.00 and 161.86, with support at 156.72 and 154.40.
The future of the Yen remains uncertain, with various factors contributing to its path in the market. Geopolitical concerns, central bank policies, and technical analysis all play a significant role in shaping the Yen’s performance against major currency pairs. Investors should stay vigilant and adapt their strategies accordingly to navigate the dynamic landscape of the forex market.