- EUR/JPY weakens near 158.80 in the early stages of the European session on Wednesday, down 0.06% on the day.
- The negative outlook for the cross prevails, with the RSI indicator bearish.
- Immediate resistance level emerges at 161.80; the first support level is seen at 158.10.
EUR/JPY extends its decline to around 158.80 during the European session on Wednesday. Risk aversion in global markets provides some support to the safe haven asset such as the Japanese Yen (JPY).
Technically, EUR/JPY maintains the bearish vibe unchanged on the daily chart as the cross remains below the key 100-day EMA. Furthermore, the downward momentum is supported by the Relative Strength Index (RSI), which is trading below the midline near 45.80, suggesting that there could still be room for further downward movement in the short term.
The September 30 low at 158.10 acts as initial support level for the cross. A break of this level will see a drop to 155.60, the lower boundary of the Bollinger Band. Extended losses could pave the way towards 154.41, the August 5 low.
On the other hand, the first barrier to the upside emerges at 161.80, the upper limit of the Bollinger Band. Any follow-on buying above the mentioned level could see a rally towards 163.15, the 100-day EMA. The additional upside filter to watch is the psychological mark of 164.00.
EUR/JPY Daily Chart
The Japanese Yen FAQs
The Japanese Yen (JPY) is one of the most traded currencies in the world. Its value is determined broadly by the performance of the Japanese economy, but more specifically by the policy of the Bank of Japan, the differential between the yields of Japanese and US bonds or the risk sentiment among traders, among other factors.
One of the mandates of the Bank of Japan is currency control, so its movements are key for the Yen. The BoJ has intervened directly in currency markets on occasion, usually to lower the value of the Yen, although it often refrains from doing so due to the political concerns of its major trading partners. The BoJ’s current ultra-loose monetary policy, based on massive stimulus to the economy, has caused the depreciation of the Yen against its main currency pairs. This process has been exacerbated more recently by a growing policy divergence between the Bank of Japan and other major central banks, which have opted to sharply raise interest rates to combat decades-old levels of inflation.
The Bank of Japan’s ultra-loose monetary policy stance has led to increased policy divergence with other central banks, particularly the US Federal Reserve. This favors the widening of the spread between US and Japanese 10-year bonds, which favors the Dollar against the Yen.
The Japanese Yen is often considered a safe haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. In turbulent times, the Yen is likely to appreciate against other currencies that are considered riskier to invest in.
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.
