- The EUR/JPY is quoted in a narrow range below the key level of psychological resistance in 170.00.
- Commercial conversations and uncertainty about tariffs with the USA continue to influence the euro and YEN.
- The RSI falls from overcompra territory, suggesting that EUR/JPY bulls may be losing impulse.
The Japanese Yen (JPY) stabilizes in front of the euro (EUR) on Wednesday while markets continue to monitor commercial developments with the United States.
At the time of writing, the EUR/JPY is quoted above 169.00 with the simple mobile average (SMA) of 10 days providing support in 168.90.
After reaching a maximum in the year of 169.86 on Monday, the inability to recover the psychological level of 170.00 pushed the pair to a narrow range.
With the deadline of tariffs on July 9, approaching rapidly, USA is focusing on smaller and gradual commercial agreements instead of general agreements, seeking to avoid triggering new tariffs.
Commercial conversations with the European Union (EU) are showing positive signs of progress. The EU has shown opening to a 10% general tariff but is pressing for exceptions in sensitive sectors such as semiconductors and pharmaceutical products.
However, tensions between the United States and Japan have increased in recent days. After a dispute arose for Japan’s reluctance to increase their US rice imports, President Trump has threatened to increase tariffs on Japanese products above 30%.
On Wednesday, Bloomberg reported the recent developments in the commercial saga between the US and Japan. Trump said Japan would receive a letter that said: “Thank you very much … we know that they cannot do the things we need, and therefore pay 30 percent, 35 percent or whatever the number we determine.”
If higher tariffs are imposed on Japan and the EU manages to ensure an agreement with the US, the EUR/JPY could continue to rise.
EUR/JPY remains limited by psychological resistance in 170.00
From a technical point of view, the level of psychological resistance of 170.00 is currently intact. This round number has kept the bulls at the last four days.
After climbing a new maximum in the year of 169.86, the bullish impulse slowed before finding temporary support above the simple mobile average (SMA) of 10 days in 168.90.
The relative force index (RSI) is 66 and points down. With the RSI, backing after trying overblain conditions last week, the downward movement reflects a fading of the bullish impulse.
Daily GRAPH OF THE EUR/JPY
Both the fundamental and technical factors influence the short -term trajectory of the EUR/JPY. If the bulls manage to break over 170, the Fibonacci recoil level of 78.6% of the Julio-August 2024 fall could come into play as a resistance in 170.93, just below the round number of 171.00.
However, if the bearish impulse increases and the EUR/JPY falls below the 10 -day SMA, the 61.8% fibonacci level in 167.40, which aligns with the 20 -day SMA, could serve as additional support for the price action.
Tariffs – Frequently Questions
Although tariffs and taxes generate government income to finance public goods and services, they have several distinctions. Tariffs are paid in advance in the entrance port, while taxes are paid at the time of purchase. Taxes are imposed on individual taxpayers and companies, while tariffs are paid by importers.
There are two schools of thought among economists regarding the use of tariffs. While some argue that tariffs are necessary to protect national industries and address commercial imbalances, others see them as a harmful tool that could potentially increase long -term prices and bring to a harmful commercial war by promoting reciprocal tariffs.
During the election campaign for the presidential elections of November 2024, Donald Trump made it clear that he intends to use tariffs to support the US economy. In 2024, Mexico, China and Canada represented 42% of the total US imports in this period, Mexico stood out as the main exporter with 466.6 billion dollars, according to the US Census Office, therefore, Trump wants to focus on these three nations by imposing tariffs. It also plans to use the income generated through tariffs to reduce personal income taxes.
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.
