- EUR/JPY is about to close April with gains of 2.25% for the month.
- An upbeat market mood weighed on the JPY, along with a “dovish” Bank of Japan (BoJ).
The shared currency is recovering against the Japanese yen after the Bank of Japan (BoJ) committed to its dovish stance, despite expressions from the Japanese Finance Minister that currency volatility is undesirable and called the moves recent as “extremely worrying”. Trading at 137.68, the EUR/JPY it is up 1.55% on the day, almost 200 pips in the trading session.
Global stocks continue to trade with gains after the recent outbreak of Covid-19 in China appears to be under control. Fighting between Ukraine and Russia has taken a backseat so far as hostilities are set to continue amid Russia’s appetite for victory.
Meanwhile, in the Asian session, the Bank of Japan kept rates unchanged and doubled down on Yield Curve Control (YCC), offering to buy an unlimited amount of 10-year JGBs at a fixed rate of 0.25%. The BoJ said it will unhesitatingly ease policy as needed in view of the impact of the pandemic.
BoJ Governor Haruhiko Kuroda said in his press conference that it is appropriate for Western central banks to take tougher measures given higher inflation and their relatively quick recovery from the pandemic. Kuroda added that there is nothing wrong with divergent monetary policy between Japan and Western nations.
On the Eurozone side, inflation in Germany surprisingly rose at its fastest pace since the early 1990s, as shown by the Consumer Price Index at 7.8% annually, beating analysts’ forecasts of 7.6%.
On the other hand, the vice-president of the European Central Bank (ECB), Luis de Guindos, said that he had not seen any signs of salary dynamics and added that the salary increases are quite prudent and are compatible with the objective of the ECB. Meanwhile, the ECB’s Visco said a rate hike could happen in the third quarter, CNBC reported.
EUR/JPY Price Forecast: Technical Outlook
As long as EUR/JPY remains above 134.29, EUR/JPY would remain bullish. The Bank of Japan collaborated in fulfilling the above, being the only bank without adjusting monetary policy. The EUR/JPY pair, on its way to the upside, broke all the resistance levels mentioned in Wednesday’s vote, opening the door for more upside.
That said, the first resistance for the EUR/JPY would be 138.00. Breaking above that level would expose 139, followed by the daily high of April 25 at 139.23, which, once broken, will push EUR/JPY towards the yearly high at 140.00.
Technical levels
Source: Fx Street
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