A downside move is pushing the Japanese Yen against the major G10 currencies at the moment, following rumors regarding a possible BOJ rate cut to come in order to continue his easing process.
During the night BOJ board member Yutaka Harada’s statement have frightened the markets, causing the sell of the Japanese currency. Following spokesman’s words, the BOJ have the possibility to act again in order to cut even more the interest rate in case the economic conditions would require it and in case the economic risks would increase. His analysis, moreover, points out that currently it is difficult to determine if the Yen level is concordant with the economic fundamentals, bringing to light the uncertainty regarding the Yen capability to maintain the actual price level
At the time of writing EUR/YPY is trading slightly higher at 123,71 (+0,10%), extending even in the London session the Yen sell off of the Asian session. This is the second consecutive higher session for the pair and it won’t be the last, before the BOJ meeting of next week, which is bringing uncertainty on the market. Another downside element for the Yen regards the unexpected Chinese trade balance data which have increased the market risk appetite, bringing more selling pressures on the safe-haven currencies, like Yen.
From a technical point of view, looking at the EUR/JPY chart, it is easy to see the next significant resistance at 124,38 (38,2% Fibonacci level between 121,98 and 128,26) after which the pair would have the possibility to gain the 125,66 level. On the opposite side, in case the cross would invert his trend, the first supportive level will be 122,52.