Yen Awaits for BoJ’s Rate Decision

Key Takeaways:

*Market sentiment swings harm Yen’s price action.

*Awaits for BoJ’S interest rate decisions that may hinder Yen’s strength.  

Yen Volatile Amid Trade Policy Uncertainty, BoJ Decision in Focus

The Japanese Yen has experienced heightened volatility this week as markets weigh shifting risk sentiment and policy uncertainty stemming from U.S. trade actions. Early in the week, the Yen strengthened on concerns over deteriorating U.S.-China relations following positive momentum in U.S.-Taiwan trade talks, which raised geopolitical tensions. However, sentiment later eased after Washington and Beijing agreed to hold trade discussions in Switzerland, dampening safe-haven demand and pressuring the Yen.

All eyes are now on the Bank of Japan’s policy decision due today. While markets widely expect the central bank to maintain its current rate stance amid fragile global conditions, lingering tensions since the start of the year have limited the Yen’s upside and constrained the BoJ’s ability to pivot hawkishly.

Investors are bracing for the possibility of a surprise move or shift in tone from the BoJ—or renewed volatility if U.S.-China trade talks fail to make meaningful progress.

Technical Analysis

AUDJPY, H4

The AUD/JPY pair has been trending in a higher-high price pattern, indicating a bullish bias. However, the rally appears to be losing steam as the pair hovers near a critical resistance level at 93.30. A decisive break above this threshold could confirm continued bullish momentum.

Yet, technical indicators paint a mixed picture. The Relative Strength Index (RSI) has slipped toward the 50 level, while the MACD flirts with the zero line—both signaling waning upside momentum. This divergence between price action and indicators suggests the risk of a bearish reversal is rising, particularly if the pair fails to sustain gains above the resistance level. 

Resistance level: 93.30, 95.20

Support level: 91.10, 88.50