The Japanese Yen (JPY) continued to show signs of fragility on Thursday, with both the GBP/JPY and EUR/JPY crosses rebounding from recent lows amid ongoing market anxieties. The GBP/JPY pair reversed an intraday dip to the 208.20-208.15 area, trading near the 209.00 level during the early European session, and remained nearly unchanged for the day as traders weighed mixed cues. The Yen struggled to attract buyers due to concerns over Japan’s aggressive expansionary fiscal policies and massive public debt, while speculation about potential intervention by Japanese authorities kept traders on high alert. Hawkish remarks from Bank of Japan (BoJ) Governor Kazuo Ueda and dovish-leaning board member Ayano Sato’s openness to further monetary tightening reinforced expectations for more interest rate hikes, limiting further JPY losses. Meanwhile, a stronger US Dollar weighed on the British Pound, capping the upside for GBP/JPY. Markets are currently pricing in a higher probability of a 25-basis-point interest rate hike by the Bank of England (BoE) at its next policy meeting on November 5, with traders awaiting speeches from BoE MPC members Megan Greene and Clare Lombardelli for further direction. The mixed fundamental backdrop supports the prospect of continued range-bound price action for GBP/JPY, warranting caution before placing fresh directional bets [1].
In the EUR/JPY market, the pair rebounded above 177.00 after modest losses, trading around 177.10 during European hours. Technical analysis indicates the cross remains within a descending channel, maintaining a bearish near-term tone as price holds below both the nine-period and 50-period Exponential Moving Averages (EMAs). The 14-day Relative Strength Index (RSI) at 33.25 suggests downside momentum is dominant but becoming stretched. The EUR/JPY cross may test support at 176.30 and the 11-month low of 175.70, with further declines exposing the 14-month low of 169.72. On the upside, resistance lies at the nine-day EMA of 177.87 and the 50-day EMA at 180.91, with a break above these levels potentially targeting the upper boundary of the channel at 184.10 and the all-time high of 187.95 set on April 17 [2].
Broader market sentiment was also influenced by renewed concerns over French sovereign debt. According to analysts at ING, a report that the French Treasury could shorten the duration of its issuance to protect the long end unsettled investors, undermining the recent modest rebound in French government bonds and reinforcing the sense of fragility around French debt and related Euro assets [2].
Currency performance data showed the Euro was strongest against the Australian Dollar, while the British Pound and Japanese Yen both posted modest declines against major peers [2].
CONCLUSION
Both GBP/JPY and EUR/JPY rebounded from recent lows as the Japanese Yen remained under pressure due to fiscal concerns and intervention risks, while hawkish BoJ commentary limited further losses. Market participants are cautious, with technical and fundamental factors suggesting continued range-bound or bearish action in these crosses. Renewed jitters over French debt added to the cautious tone for Euro assets.