- The EUR/JPY recovers positive traction in the middle of a combination of support factors.
- A weaker USD benefits the EUR, while a softer tokyo IPC undermines the JPY.
- The daily RSI remains close to the overcompra zone and could limit the crossing.
The EUR/JPY crossroads invests an intradication to the region of 168.65-168.60 and rises to the upper end of its daily rank during the first part of the European session on Friday. Cash prices are currently negotiated around the supply zone of 169.25-169.30, with an increase of almost 0.20% in the day, and seem ready to appreciate even more.
The shared currency continues to benefit from the predominant seller bias of the US dollar (USD). The Japanese Yen (JPY), on the other hand, attracts some intra -sellers after the publication of a softer Tokyo IPC. A separate report showed that Japan’s retail sales grew to the slowest rhythm since February and reaffirmed the bets that the Bank of Japan (BOJ) could give up an increase in rates in 2025. This, along with a positive risk tone, undermines the jpy of secure refuge and validates the positive perspective for the EUR/JPY crossing.
However, the relative force index (RSI) in the daily chart remains close to the territory of overcompra, which, in turn, could stop the operators of opening new bullish bets. Therefore, it will be prudent to expect an extension of a consolidative price movement several days before positioning for any additional upward movement. However, bias seems to bow in favor of the EUR/JPY bulls, suggesting that any correction could continue to support support near the weekly trend line, around the 168.70-168.65 area.
A convincing rupture below the latter, however, could cause some technical sales and pave the way for a significant decrease. The EUR/JPY crossing could then accelerate the fall to the round figure of 168.00 en route to the region of 167.60-167.55 before eventually falling to the lower end of the weekly range, around the area of ​​167.00-166.90. The latter should act as a key pivot point, which if it breaks decisively, would deny the constructive perspective and change the short -term bias in favor of the bassists.
On the other hand, the 169.70 area, or a maximum of almost a year reached on Monday, could offer some resistance. A shopping follow -up, which leads to a subsequent strength beyond the 170.00 psychological brand, will be seen as a new trigger for the bullies. The EUR/JPY crossing could then rise even more beyond the intermediate obstacle of 170.40, towards recovering the 171.00 mark since June 2024.
EUR/JPY 1 hour graphic
Japan Faqs Bank
The Bank of Japan (BOJ) is the Japanese Central Bank, which sets the country’s monetary policy. Its mandate is to issue tickets and carry out monetary and foreign exchange control to guarantee the stability of prices, which means an inflation objective around 2%.
The Bank of Japan has embarked on an ultralaxa monetary policy since 2013 in order to stimulate the economy and feed inflation in the middle of a low inflation environment. The bank’s policy is based on the Quantitative and Qualitative Easing (QQE), or ticket printing to buy assets such as state or business bonds to provide liquidity. In 2016, the Bank redoubled its strategy and relaxed even more policy by introducing negative interest rates and then directly controlling the performance of its state bonds to 10 years.
The massive stimulus of the Bank of Japan has caused the depreciation of the Yen in front of its main monetary peers. This process has been more recently exacerbated due to a growing divergence of policies between the Bank of Japan and other main central banks, which have chosen to abruptly increase interest rates to combat inflation levels that have been in historical maximums. Japan Bank’s policy to maintain low types has caused an increase in differential with other currencies, dragging the value of YEN.
The weakness of the YEN and the rebound in world energy prices have caused an increase in Japanese inflation, which has exceeded the 2% objective set by the Bank of Japan. Even so, the Bank of Japan judges that the sustainable and stable achievement of the 2%objective is not yet glimpsed, so an abrupt change of current monetary policy seems unlikely.
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.
