- The EUR/JPY pair is experiencing a pullback and is approaching 159.00 again.
- The Euro reached its highest bids against the Yen since 2008, peaking at 160.85.
- The dovish BOJ weakens the yen and the EU data does not give the signal.
On October 31, the pair EUR/JPY hit fifteen-year highs at 160.85, while the Yen continued to plummet in the broader market as the Bank of Japan (BoJ) remained undecided about raising interest rates.
The Bank of Japan’s interest rate differential with other central banks continues to widen, so the yen can only continue to weaken.
European economic data remains muted, softening the Euro (EUR) after EU Gross Domestic Product (GDP) figures came in below expectations early on Wednesday. EU GDP for the third quarter stood at -0.1%, down from 0.1% in the previous quarter and below the forecast of 0%.
The EU Harmonized Index of Consumer Prices (HICP) for the year to October also fell short of market expectations, at 2.9% versus 3.1% forecast, and an even larger-than-expected decline from 4.3% previously.
Overall, the Bank of Japan confounded market expectations of a defensive stance to protect the yen, maintaining interest rates, mechanisms and only making a small change to its yield curve control tool, as the bank The Japanese central bank continues to fear that long-term inflation will not reach the minimum 2% target set by the Bank of Japan.
The Bank of Japan’s own inflation expectations do not see inflation falling below 2% until well into 2025, even as Japanese consumers continue to bear the brunt of the falling Yen.
EUR/JPY technical levels
The EUR/JPY pair is retreating towards the 159.00 area, while the pair is retreating towards the short-term median at the 200 hourly SMA, just below 159.00, paring yesterday’s gains.
The pair threatens to return to known swing highs near 158.80, with the last significant swing low being at the October 30 low of 157.70.
With today’s pullback, the EUR/JPY pair consolidates between the 200-hour SMA and the 50-hour SMA near 159.60.
EUR/JPY Hourly Chart
EUR/JPY technical levels
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
