FxNews—Japan’s 10-year government bond yield rose above 1.07%. This increase happened because investors reacted to stronger-than-expected trade figures. In October, Japan’s exports grew by 3.1%, turning around a 1.7% drop from September and surpassing the forecasted 2.2% rise. Imports also increased by 0.4%, even though experts predicted a 0.4% decrease.
BOJ’s Ueda Signals Cautious Approach to Rate Hikes
Meanwhile, on Tuesday, global bond yields initially fell due to heightened tensions in the Russia-Ukraine conflict, which prompted investors to seek safer investments. However, later in the day, worries about geopolitical issues eased.
Regarding monetary policy, the Governor of the Bank of Japan, Kazuo Ueda, stated on Monday that any future interest rate hikes would be gradual and based on the economy’s performance. He did not provide a specific timeline for when these increases might take place.
EURJPY Technical Analysis
As of this writing, the currency pair rose from 161.9 to approximately 164.3. This uptrend wave was technically expected because RSI 14 signaled a bullish divergence on November 19.
Currently, the EUR/JPY pair is testing the 165.0 resistance. However, the 4-hour chart formed an inverted candlestick pattern, hinting at a trend reversal. Concurrently, the Stochastic Oscillator depicts 91 in the description, meaning Euro is overpriced in the short term. These bearish signals are backed by the fact that EUR/JPY prices are below the 100-period simple moving average, making the primary trend bearish.
Overall, the technical indicators suggest the primary trend is bearish; the market is overbought and should resume its downtrend trajectory.
EURJPY Trend Outlook Remains Bearish Below 160.0
The EUR/JPY Immediate resistance is at 160.0, backed by the descending trendline, and the immediate support rests at the 164.0 mark, backed by the bullish fair value gap.
From a technical perspective, the downtrend could resume if EUR/JPY bears push the prices below the immediate resistance (164.0). In this scenario, the prices can dip to the 78.6% Fibonacci level at 162.9, resuming the bearish trajectory.
Also read: USDMXN Dips Amid Banxico Rate Cut
EURJPY Bullish Scenario
On the other hand, the current uptrend could extend if bulls (buyers) pull EUR/JPY above the immediate resistance (165.0). If this scenario unfolds, the next bullish target could be the 166.7 mark.
- Support: 164.0 / 163.6 / 162.9
- Resistance: 165.0 / 166.0 / 166.7