The Bank of Japan (BoJ) released their summary of opinions, which included some bearish comments from BoJ policymakers. While Deputy Governor Shinichi Uchida helped stabilize the market with his softer tone compared to Governor Ueda, the overall sentiment is cautious. The BoJ mentioned that the probability of reaching the inflation target has increased, but also anticipates upward pressure. The projection of hitting the inflation target by the second half of 2025 raises questions for market participants and could potentially position the Yen as a strong contender next year. However, the contrast in monetary policy between the BoJ and other central banks, which are cutting rates, could result in the Yen gaining ground in 2025.
Geopolitical concerns have the potential to strengthen the Yen in the market. However, the safe haven appeal might be split among the US Dollar, Yen, and Swiss Franc. This division could limit the Yen’s gains against the Dollar but benefit it in comparison to the Euro and GBP. The uncertainty surrounding international relations and global events adds an additional layer of complexity to the Yen’s future trajectory.
From a technical perspective, the USD/JPY pair has displayed a rebound and formed an imperfect morning star candlestick pattern. While this pattern typically signals a bullish move, several factors need to be taken into consideration. The H4 chart shows higher highs and higher lows, indicating a potential return to the 150.00 level in the near future. However, a close below the recent lower swing high at 144.25 could invalidate the bullish outlook, leading to a retest of the psychological 140.00 level.
GBP/JPY mirrors the USD/JPY chart, with the pair currently trading just above the crucial support level at 185.00. The H4 chart demonstrates a similar pattern to USD/JPY, with higher highs and higher lows indicating bullish momentum. A break below the support at 183.30 could disrupt the bullish structure, potentially leading to a move towards recent lows around 175.00. Resistance levels are found at 187.65, 190.00, and 192.00.
Similarly to USD/JPY and GBP/JPY, EUR/JPY is displaying an imperfect morning star candlestick pattern on the daily chart. The pair recently retested the support area near 159.00 before bouncing back. A close below the lower swing high at 157.50 on the H4 timeframe could invalidate the bullish trend, prompting a retest of recent lows around 154.40. Immediate resistance levels are at 160.00 and 161.86, with a crucial zone at 163.51 aligning with the 200-day moving average.
The future of the Yen remains uncertain, with various factors influencing its performance in the market. Geopolitical concerns, monetary policy decisions, and technical analysis all play a role in determining the Yen’s trajectory. As investors navigate the complex landscape of global finance, staying informed and vigilant is key to making informed decisions in the ever-evolving financial markets.
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