Forex Market Outlook: Yen in Focus, EUR/JPY Favored on Dips
1The forex market is currently shaped by mixed signals from central banks, leading to cautious trading strategies. The US dollar remains supported by the Federal Reserveās lessādovish stance, while the yen sits at a critical juncture ahead of the Bank of Japanās policy meeting. A potential hawkish shift from the BoJ could trigger yen strength, placing USD/JPY under watch. In contrast, EUR/JPY continues to show strong upward momentum, driven by euro strength and persistent yen weakness, making it a preferred buy on dips. GBP/USD remains resilient on the back of strong UK inflation data and bullish technicals, though US labor market risks add caution. Meanwhile, EUR/USD faces a waitāandāsee pattern as traders digest the Fedās recent stance and mixed US data. With volatility risks elevated due to central bank decisions and upcoming global economic releases, traders are advised to manage positions with disciplined stopālosses and stay alert to policy surprises.