The Japanese Yen (JPY) continues to face selling pressure against both the Euro (EUR) and the Australian Dollar (AUD) as recent Bank of Japan (BoJ) policy moves and market reactions shape currency dynamics. The EUR/JPY pair extended its losses for a second consecutive day, trading around 180.10 during Asian hours on Wednesday, and is testing immediate support at the psychological 180.00 level, which aligns with the nine-day Exponential Moving Average (EMA) of 179.95. Technical indicators show a persistent bearish bias, with the pair capped by the 50-day EMA at 182.46 and the 14-day Relative Strength Index (RSI) at 41.70, indicating subdued buying pressure. A break below the current support could push EUR/JPY toward the lower boundary of its descending channel at 177.30, and potentially to the 11-month low of 175.70 recorded in November 2025. On the upside, resistance levels are noted at 182.46, 184.80, and the all-time high of 187.95 set on April 17 [1].
Analysts at MUFG suggest that the BoJ's latest policy move marks the beginning of a 'new phase' for monetary policy, with expectations of a rate hike every three months. However, external factors such as higher US yields and elevated energy prices continue to weigh on the Yen, reinforcing the view that BoJ policy will gradually but steadily become less accommodative over the coming quarters [1].
In the AUD/JPY cross, the pair trades in negative territory around 111.95 during the early European session on Wednesday. The BoJ's decision last week to raise its policy rate by 25 basis points to 1.25%—the highest since 1995—was met with a 7-2 vote, with board members Toichiro Asada and Ayano Sato dissenting. This dissent is seen by markets as a signal that further hikes may be difficult to implement, undermining the Yen. Markets are currently pricing in about a 30% chance that the BoJ will raise its benchmark short-term rate to 1.50% in October, according to Bloomberg [2].
Meanwhile, the Yen experienced a late-Friday rebound after reports that the BoJ conducted a rate check during the New York session, which analysts at MUFG/BTMU interpret as a signal of readiness to intervene if the Yen continues to weaken. This intervention prospect has helped cap further downside in the currency and shifted market psychology [2].
On the technical front, AUD/JPY retains a bearish outlook beneath the 100-day simple moving average (SMA), with resistance at 112.05 (Bollinger middle band) and 112.85 (100-day SMA). The next upside targets are 113.61 (August 18 high), 114.67 (July 27 high), and 115.10 (upper Bollinger band). Key support is at the psychological 100.00 level, with the September 14 low at 109.67 as the next downside marker [2].
On the Euro side, the currency was the weakest against the US Dollar on the day, with a -0.22% change, and showed a -0.08% change against the Yen [1].
CONCLUSION
Both EUR/JPY and AUD/JPY remain under pressure as the market questions the sustainability of further BoJ tightening, despite the recent rate hike. Technical indicators for both pairs point to a bearish bias, with key support levels in focus. The prospect of BoJ intervention and ongoing external pressures suggest continued volatility for the Yen in the near term.