The foreign exchange market is witnessing pivotal technical tests across yen-related pairs, with EUR/JPY challenging a strong confluence resistance near 185.00 and AUD/JPY maintaining its broader bullish structure despite a minor dip to 113.50. Both pairs reflect the ongoing interplay between eurozone strength, commodity-driven currencies, and the persistently weak Japanese yen.
EUR/JPY: 185.00 as a decisive battleground
EUR/JPY has approached the critical 185.00 level, an area strengthened by the alignment of multiple technical hurdles. This zone coincides with the 61.8% Fibonacci retracement of the previous downswing, the 200-day simple moving average, and prior swing highs. The Relative Strength Index is exhibiting early overbought signals, warning of a possible short-term correction. A daily close above 185.00 would unlock further upside toward 187.00, while a rejection could drag the pair back to support at 182.50 or the psychological 180.00 mark. Fundamentally, supportive eurozone PMI data and the European Central Bank’s higher-for-longer rate stance contrast with the Bank of Japan’s cautious normalisation, keeping the carry trade alive and favouring the euro.
AUD/JPY: dip-buying within an intact uptrend
AUD/JPY slipped to around 113.50 amid profit-taking and a cautious risk tone, yet the multi-week ascending channel remains intact. The 20-day exponential moving average near 113.50 provided immediate support, with the 113.00 psychological level acting as a critical floor. Momentum indicators like MACD and RSI hold in bullish territory, suggesting the correction is healthy. A bounce from current levels is expected to retarget the 114.50 resistance, and a breakout there would expose 115.00. The Australian dollar continues to benefit from solid risk appetite, China’s recovery hopes, and favourable terms of trade, while the wide interest-rate gap between the Reserve Bank of Australia and the Bank of Japan sustains carry-trade demand.
Both pairs underscore the dominant theme: yen weakness driven by ultra-loose monetary policy continues to fuel upside in yen crosses, though technical exhaustion signs warrant caution. Traders remain vigilant for potential Japanese intervention or shifts in risk sentiment that could rapidly alter the trend.
