- EUR/JPY gains strength about 173.10 during Wednesday’s Asian session.
- The positive bias of the cross prevails above the 100 -day EMA, but the RSI overcompra condition could limit its rise.
- The first upward objective arises in 173.50; The initial support level to monitor is 170.95.
The EUR/JPY crossroads gains impulse around 173.10 during Wednesday’s Asian negotiation hours. The Japanese Yen (JPY) weakens in front of the euro (EUR) as operators reduce bets due to an immediate increase in interest rates by the Bank of Japan (BOJ) due to concerns about the economic repercussions of the highest US tariffs.
According to the daily chart, the constructive perspective of the EUR/JPY remains intact since the crossing is maintained above the key exponential emotion of 100 days. However, the 14 -day relative force (RSI) index is above the midline about 75.45, indicating the RSI overband condition. This suggests that greater consolidation cannot be ruled out before positioning for any appreciation of the EUR/JPY in the short term.
The upper limit of the Bollinger band in 173.50 acts as an immediate resistance level for the crossing. A decisive rupture above this level could see a rebound around 174.52, the maximum of July 3, 2024. More to the north, the following obstacle is observed in 175.43, the maximum of July 11, 2024.
On the other hand, the initial support level for the EUR/JPY is at 170.95, the minimum of July 10. A rupture of this level could expose the psychological level of 170.00. The next level of containment to monitor is 169.04, the minimum of July 2.
EUR/JPY DAILY GRAPH
Japanese – frequent questions
The Japanese Yen (JPY) is one of the most negotiated currencies in the world. Its value is determined in general by the march of the Japanese economy, but more specifically by the policy of the Bank of Japan, the differential between the yields of the Japanese and American bonds or the feeling of risk among the operators, among other factors.
One of the mandates of the Bank of Japan is the currency control, so its movements are key to the YEN. The BOJ has intervened directly in the currency markets sometimes, generally to lower the value of YEN, although it abstains often due to the political concerns of its main commercial partners. The current ultralaxy monetary policy of the BOJ, based on mass stimuli to the economy, 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 fight against inflation levels of decades.
The position of the Bank of Japan to maintain an ultralaxa monetary policy has caused an increase in political divergence with other central banks, particularly with the US Federal Reserve. This favors the expansion of the differential between the American and Japanese bonds to 10 years, which favors the dollar against Yen.
The Japanese Yen is usually considered a safe shelter investment. This means that in times of tension in markets, investors are more likely to put their money in the Japanese currency due to their supposed reliability and stability. In turbulent times, the Yen is likely to be revalued in front of other currencies in which it is considered more risky to invest.
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.
