EUR/USD on the rise, while USD/JPY shows signs of weakness after BoJ action

EUR/USD expected to push higher, while USD/JPY reaction to BoJ action signals the potential for another turn lower.

The euro (EUR) to US dollar (USD) exchange rate has risen close to 9% over the past three months on the back of moderately improved economic sentiment in the eurozone, as well as the slowing of interest rate hikes by the US Federal Reserve (Fed), which has reduced the greenbacks appeal as a safe haven. EUR/USD has largely been in consolidation mode over the course of the past two weeks, although the price appears to be regaining traction once again. Today does see US pending home sales out of the US, with markets expecting to see things calm down after dramatic declines of 4.6% and 10.2% over the past two-months.

In any case, the wobbles seen on US stock markets have done little to lift the dollar here, with a decline through $1.0443 support required to bring this current uptrend to an end. Until then, another push higher looks likely before long.

USD/JPY on the rise but recent trend holds for now

The yen is the official currency of Japan. It is the third-most traded currency in the foreign exchange market, after the United States dollar (US$) and the Euro.

USD/JPY is extending the decline below 134.00, resuming its downtrend in Asia this Thursday. The Yen cheers risk-aversion, as it remains the main theme so far. Investors remain unnerved amid fresh Covid concerns from China. The US Treasury yields retreat, adding to the weight on the pair.

The Bank of Japan (BoJ) has stepped in with an unscheduled bond buying operation overnight, following a spike through the limit in Japanese Government Bonds. The signal that the BoJ are struggling to maintain control highlights the potential for further bond buying in the future.

Nevertheless, we have observed the price turn lower since that announcement. With that in mind, the bullish trend seen over the course of the past two months does remain in play, with another turn lower looking likely unless the price breaks up through the $1.3817 swing high.