The Japanese Yen (JPY) exhibited divergent performance against major currencies on Monday. Against the US Dollar, the USD/JPY pair gained ground after two days of losses, trading around 162.00 during Asian hours and maintaining a bullish near-term bias as it held above both the nine-period and 50-period Exponential Moving Averages (EMAs) [1]. Technical analysis indicated that USD/JPY remains within an ascending channel, with initial resistance at the 40-year high of 162.84 reached on July 1, and further resistance at the upper boundary of the channel near 164.00. Immediate support is seen at the nine-day EMA of 161.98, with further downside levels at 160.80 and 160.58. A break below the channel could expose the four-month low of 155.04, recorded on May 6 [1]. The Japanese Yen was the weakest against the US Dollar among major currencies, as shown by a heat map of percentage changes [1].
In contrast, the JPY strengthened against the Australian Dollar, with the AUD/JPY cross softening below 112.50 and trading around 112.25 during early European trading hours [2]. This move was attributed to renewed efforts by Japanese authorities to encourage the nation’s large public pension funds to increase allocations to domestic assets. Fabien Yip, a market analyst at IG, noted that with approximately 50% of these funds currently allocated to foreign investments, a shift toward domestic assets could result in significant inflows for Japanese equities and bonds, supporting the Yen [2].
Technical analysis for AUD/JPY showed a mildly bearish bias as the pair slipped under the Bollinger middle band and consolidated above the lower half of its recent range. The 20-day Bollinger envelope capped price action, while the 100-day simple moving average (SMA) at 112.59 remained a key trend reference, suggesting that recent weakness is still within a broader uptrend. The Relative Strength Index (14) eased to about 47, indicating fading upside momentum without oversold conditions. Immediate resistance is at the Bollinger middle band near 112.35, with further resistance at 113.52. On the downside, a move below 111.15 could trigger deeper corrective risk, with the 100-day SMA acting as an important demand area [2].
No explicit forward-looking statements or analyst opinions regarding the USD/JPY pair were provided, but for AUD/JPY, Fabien Yip suggested that increased domestic asset allocation by pension funds would be supportive for the Yen and Japanese markets [2].
CONCLUSION
The Japanese Yen showed weakness against the US Dollar but gained strength versus the Australian Dollar, influenced by technical factors and speculation about pension fund asset allocation. Market sentiment remains mixed, with the Yen under pressure against the Dollar but potentially supported by domestic policy shifts. Investors should monitor further developments in Japanese pension fund strategies and technical levels for both USD/JPY and AUD/JPY.