- The EUR/JPY descends to around 172.05 in the first measures of the European session on Monday, lowering 0.15% in the day.
- The positive bias of the cross prevails above the 100 -day EMA, but the RSI overcompra condition could limit its rise.
- The immediate resistance level arises in the area of 172.95-173.00; The first downward objective to take into account is 170.81.
The EUR/JPY cross loses land about 172.05 during the first measures of the European session on Monday. The euro (EUR) weakens in front of the Japanese yen (JPY) after the US president, Donald Trump, said on Saturday that the United States (USA.) Will impose a 30% tariff to the products of the European Union (EU), as of August 1.
Technically, the constructive perspective of the EUR/JPY is maintained since the crossing is well supported above the exponential mobile average (EMA) of 100 days in the daily chart. However, the 14 -day relative force index (RSI) is above the midline about 70.80, indicating the RSI overcompra condition. This suggests that greater consolidation or temporary sale cannot be ruled out before positioning for any EUR/JPY appreciation in the short term.
The first upward barrier for the crossing arises in the 172.95-173.00 area, representing the upper limit of the Bollinger band and the psychological brand. The extended earnings could see a rebound to 174.52, the maximum of July 3, 2024. The additional filter to take into account is 175.43, the maximum of July 11, 2024.
On the other hand, the initial support level for the EUR/JPY is found in 170.81, the minimum of July 11. A sustained trade below the mentioned level could see a drop at 170.00, a round figure. The following downward target is observed in 169.04, the minimum of July 2.
EUR/JPY DAILY GRAPH
EURO – FREQUENT QUESTIONS
The euro is the currency of the 19 countries of the European Union that belong to the Eurozone. It is the second most negotiated currency in the world, behind the US dollar. In 2022, it represented 31 % of all foreign exchange transactions, with an average daily business volume of more than 2.2 billion dollars a day. The EUR/USD is the most negotiated currency pair in the world, with an estimate of 30 %of all transactions, followed by the EUR/JPY (4 %), the EUR/GBP (3 %) and the EUR/AU (2 %).
The European Central Bank (ECB), based in Frankfurt (Germany), is the Eurozone reserve bank. The ECB establishes interest rates and manages monetary policy. The main mandate of the ECB is to maintain price stability, which means controlling inflation or stimulating growth. Its main tool is the rise or decrease in interest rates. Relatively high interest rates (or the expectation of higher types) usually benefit the euro and vice versa. The GOVERNMENT BOOK of the ECB makes decisions about monetary policy in meetings that are held eight times a year. The decisions are made by the directors of the National Banks of the Eurozone and six permanent members, including the president of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the harmonized consumer prices index (IPCA), are an important economic indicator for the euro. If inflation increases more than expected, especially if it exceeds 2% of the ECB, it forces the ECB to rise interest rates to control it again. Relatively high interest rates compared to their counterparts usually benefit the euro, since they make the region more attractive as a place for global investors to deposit their money.
Published data measure the health of the economy and can have an impact on the euro. Indicators such as GDP, manufacturing and services PMIs, employment and consumer trust surveys can influence the direction of the single currency. A strong economy is good for the euro. Not only attracts more foreign investment, but it can encourage the ECB to raise interest rates, which will directly strengthen the euro. Otherwise, if economic data is weak, the euro is likely to fall. The economic data of the four largest economies in the euro zone (Germany, France, Italy and Spain) are especially significant, since they represent 75% of the economy of the euro area.
Another important fact that is published on the euro is the commercial balance. This indicator measures the difference between what a country earns with its exports and what you spend on imports during a given period. If a country produces highly demanded export products, its currency will gain value simply by the additional demand created by foreign buyers seeking to buy those goods. Therefore, a positive net trade balance strengthens a currency and vice versa in the case of a negative balance
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.
