- EUR/JPY is consolidating near recent highs above the 136.50 mark on Monday in quiet, holiday-reduced trading.
- “Until the BOJ changes its ultra-dovish stance… monetary policy divergence suggests continued yen weakness,” one analyst said.
- Techs are eyeing a possible break above the 137.00 level and a push towards 140.00.
The EUR/JPY is consolidating near recent highs above 136.50 on Monday in quiet, holiday-reduced trading (European markets are closed for Easter), with 137.00 still acting as a top, as has been the case in recent sessions . Japanese politicians’ rhetoric regarding the yen’s recent weakness was in the spotlight during the Asian session on Monday and continues to offer little hope for EUR/JPY bears.
Analysts have said that a key reason for the yen’s recent weakness is the BoJ’s relatively dovish stance against its increasingly hawkish G10 peers. Although the bank will acknowledge mounting inflationary pressures at its policy meeting later this month, no changes to its flagship negative interest rate and yield curve control policies are expected. BoJ Governor Haruhiko Kuroda acknowledged on Monday that a weaker yen could hurt earnings, but that it was still premature to discuss an exit from his ultra-accommodative policies.
Meanwhile, Japan’s Finance Minister Shunichi Suzuki stressed that the BoJ’s goal is to achieve its inflation target, not to manipulate exchange rates. “We see a low risk of currency intervention,” said analysts at BBH Global Currency Strategy. “Until the BOJ changes its ultra-dovish stance, the monetary policy divergence suggests continued yen weakness and intervention would likely have little lasting impact,” they added.
Techs have argued that for the past few weeks, the EUR/JPY has formed an ascending triangle, a pattern that is often associated with a breakout to the upside. For now, the top of this pattern is the 137.00 level. A break above here would open the door for a quick test of 2018 highs at 137.60 and then a push towards 140, a level last seen in 2015.
technical levels
Source: Fx Street
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