Japanese Yen Aided by Fed Pause View, Geopolitics; USD/JPY, GBP/JPY, AUD/JPY

US Dollar, Australian Dollar, British Pound vs. Japanese Yen – Price Action:

• USD/JPY continues to hover below the psychological 150 mark.
• GBP/JPY is attempting to rise further; AUD/JPY is holding above key support.
• What is the outlook and what are the key levels to watch in select JPY crosses?

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Dovish comments from US Federal Reserve officials coupled with the violence in Israel and Gaza have put a lid on US Treasury yields, boosting the Japanese yen.

Dallas Fed president Lorie Logan and Fed Vice Chair Philip Jefferson on Monday suggested that the sharp rise in yields has tightened financial conditions, lessening the need for further interest rate hikes. Markets are now pricing in around a 10% chance of a 25 basis points hike by the Fed when it meets next month, down from around a 28% chance a week ago. Moreover, the yen appears to have attracted some safe-haven bids on account of a flare up in geopolitical tensions.

The pause in the yen’s slide against the US dollar is a welcome sign as it hovers in the range that invited intervention by Japanese authorities last year. The yen has been under pressure as BOJ’s persistent ultra-easymonetary policydiverges from its peers where central banks remain hawkish.

USD/JPY 240-Minute Chart

Chart Created by Manish Jaradi Using TradingView

Having said that, unless global central banks take a step back from the hawkishness and/or BOJ steps up its hawkishness, the path of least resistance for the yen remains sideways to down. For more details, see “Japanese Yen Tumbles as BOJ Maintains Status Quo: USD/JPY Eyes 150,” published September 22.

USD/JPY Daily Chart

Chart Created by Manish Jaradi Using TradingView

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USD/JPY: 147.35 is key support

USD/JPY continues to hold under stiff resistance at the psychological 150 mark, not too far from the 2022 high of 152.00. A potential lower high created last week raises the risk of a test of the 200-period moving average, around the early-October low of 147.35. This support is strong and may not break in the first attempt at least. Given the buoyant upward momentum on the daily chart, the pair could continue to hover in the 147.00-150.00 range in the interim. However, any break below 147.35 would confirm that the broader upward pressure was easing.

GBP/JPY Daily Chart

Chart Created by Manish Jaradi Using TradingView

GBP/JPY: Bullish move ahead?

GBP/JPY is now testing key resistance at last week’s high of 183.00. Any break above could clear the path up to the August high of 186.75. Importantly, the cross’ hold above strong converged support on the 89-day moving average confirms that the broader trend remains up and the recent sideways price action is a pause, rather than a reversal of the uptrend.

AUD/JPY Weekly Chart

Chart Created by Manish Jaradi Using TradingView

AUD/JPY: Range likely

AUD/JPY continues to hold above quite strong converged support at the 89-day moving average, the February high, and the lower edge of the Ichimoku cloud on the daily charts, ashighlighted in the previous update. However, unless the cross clears the June high of 97.70 the path of least remains sideways at best.

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— Written by Manish Jaradi, Strategist for DailyFX.com

— Contact and follow Jaradi on Twitter: @JaradiManish