In August, the Japanese yen became one of the most popular instruments in the forex market. Following an unexpected rate hike by the Bank of Japan and weak labour market data from the US, the USD/JPY pair dropped by more than 1000 pips, settling below the psychological level of 150.00. The divergent monetary policies of the US and Japanese regulators contributed to increased volatility in yen pairs. However, after a speech by the Bank of Japan's Deputy Governor, the yen sharply corrected. Shinichi Uchida stated that "it is necessary to maintain the current level of monetary easing," which the market interpreted as a signal that the yen's rate is unlikely to increase this year.

Currently, the yen is experiencing a corrective pullback. Let's consider the possible developments in the upcoming trading sessions.

USD/JPY

Technical analysis of the USD/JPY pair indicates a potential continuation of the corrective pullback, as a "bullish harami" pattern formed on the daily timeframe two days ago. If the recent high at 147.90 is surpassed, the price may test the important area of 151.00-150.00. A decline below 145.40-145.00 could lead to a resumption of the downward movement towards 142.00-141.00.

The following events will be crucial for USD/JPY price formation:

• Today at 15.30 (GMT +3:00) the release of the US initial jobless claims data.
• Today at 19.00 (GMT +3:00) the publication of the Atlanta Federal Reserve’s GDPNow indicator.

EUR/JPY

The EUR/JPY pair also saw a sharp decline last month. Currently, the price is trading near the psychological level of 160.00. If the pair's buyers can push the price above yesterday's high, the corrective rise could continue towards 165.00-164.00. A resumption of selling could be expected after a firm move below 158.70-158.00.

Events that could impact the current state of EUR/JPY include:

• Today at 09.45 (GMT +3:00) the release of France's trade balance.
• Tomorrow at 09.00 (GMT +3:00) the release of Germany's Consumer Price Index (CPI) for July.

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