Both AUD/JPY and EUR/JPY currency crosses are exhibiting bearish near-term biases, with technical indicators suggesting limited upside momentum and rallies likely to be capped. The AUD/JPY cross trades around 109.95, recovering from a six-month low but remaining below the 100-day simple moving average, which maintains its bearish bias. The 14-day Relative Strength Index for AUD/JPY is at 37.33, just above oversold territory, indicating that while downside momentum persists, selling pressure may be losing intensity as the pair consolidates near recent lows. Key support levels for AUD/JPY are identified at 109.30, 108.89, and 107.69, while resistance is clustered at 110.90, 112.50, and 112.65 [1].
EUR/JPY halted a four-day losing streak and is trading around 179.20, confined within a descending channel pattern that reinforces a bearish outlook. The pair remains below both the nine- and 50-day Exponential Moving Averages, with the 14-day RSI at 40.46 in neutral-to-soft territory. EUR/JPY may fall toward 176.80 and the 11-month low of 175.70, while resistance levels are at 179.22, 181.74, 184.40, and the all-time high of 187.95 set on April 17 [2].
Market sentiment toward the Japanese Yen is being shaped by expectations of a faster Bank of Japan (BoJ) rate hiking cycle. Analysts at MUFG highlight that market participants now anticipate 3-4 more hikes in the year ahead, reflecting a steepening tightening trajectory. However, former BoJ official Kazuo Momma suggests the 'basic pace will probably be once every three months,' which aligns with MUFG's forecast for another hike before the end of this year at the December policy meeting [1][2].
The Tankan survey released Thursday showed mixed signals for the Japanese economy: the Large Manufacturing Index rose to 24 in Q3 from 22 in Q2, though it missed the market expectation of 25, while the Non-Manufacturing Index declined to 35 in Q3 from 37 in Q2, below the consensus of 36. These mixed economic signals may soften the chance of a back-to-back rate hike from the BoJ this month [1].
CONCLUSION
Expectations for a more assertive Bank of Japan rate hiking cycle are providing support for the Japanese Yen, even as both AUD/JPY and EUR/JPY crosses retain bearish technical biases. Mixed economic data from Japan and gradual tightening guidance suggest the BoJ may proceed cautiously, with another rate hike likely before year-end. Market participants should monitor technical resistance and support levels, as well as upcoming BoJ policy decisions, for further direction.