EUR/JPY rebounded to the ¥181 range and GBP/JPY to the ¥211 range on yen selling after the BoJ meeting. Next week’s resistance levels are ¥182.50 and ¥213, while the 19–23 September holiday period is also expected to influence market moves.
The yen’s depreciation trend strengthened after the Bank of Japan raised its policy rate from 1.00% to 1.25%, with EUR/JPY rebounding sharply to the ¥181 range and GBP/JPY to the ¥211 range this week. Governor Ueda said it would take time for inflation to become firmly established around the 2% level, while the guidance lacked any indication of additional rate hikes at a rapid pace.
The key focus for EUR/JPY next week is expected to be a break above ¥182.50, with the 25-day moving average viewed as a pivot level. Depending on economic indicators, the pair may test the ¥182 range.
GBP/JPY is expected to trade around the ¥213 resistance zone next week, with the area around ¥212.87–¥213.10 viewed as a key barrier. The BoE’s policy decision and comments from its deputy governors and other officials could affect whether the pair breaks through this resistance.
During Japan’s holiday period from 19 to 23 September, liquidity in the Tokyo market is expected to decline, raising the possibility of larger moves led by overseas investors.
In light of the economic indicator calendar and the yen-selling trend following the BoJ meeting, yen selling after the meeting may continue to provide support for both EUR/JPY and GBP/JPY next week, but the key question will be whether they can break through their respective resistance levels.