In today’s comprehensive EURJPY forecast, we will first scrutinize the current economic conditions in Japan. Following that, we will meticulously delve into the details of the technical analysis of the EURJPY pair.
US Downturn Boosts Yen
Bloomberg—The Japanese yen has seen a notable increase in value against the US dollar. This shift occurred as the dollar weakened due to various economic factors in the United States. Analysts at FxNews have observed that economic activities in the US are slowing down. This slowdown has led many to believe that the Federal Reserve, the central bank of the United States, may stop increasing interest rates. There’s even talk that they might lower these rates next year.
Meanwhile, in Japan, the inflation rate has significantly risen. It reached 3.3% in October, up from 3% in September. This rate is the highest since last July, showing a noticeable increase in the cost of goods and services. Inflation affects everything from the price of groceries to the cost of living, making it an important economic indicator.
On another front, Japan’s business activities have been slowing down, especially in the manufacturing sector. This decline is the most significant in nearly a year, indicating challenges in this vital area of the economy. Manufacturing is a key industry, contributing to domestic economic strength and international trade.
The Bank of Japan is crucial in managing the country’s monetary policy. In its latest meeting in October, the Bank reaffirmed its dedication to policies that support economic growth. These include keeping interest rates low to encourage spending and investment. Interestingly, the Bank changed its approach to managing government bond yields.
They now see a 1% yield on 10-year government bonds as a flexible upper limit rather than a strict maximum. This change is subtle but significant, showing the Bank’s willingness to adapt its strategies to current economic conditions.
EURJPY Technical Analysis and Forecast
The EURJPY pair is testing the median line of the bearish flag for the second time, while the Awesome Oscillator signals divergence and its bars remain red. Despite these indicators, the EURJPY’s main trend is bullish, with the pair hovering above the middle line of the flag.
For a more in-depth EURJPY forecast, examining the 4-hour (4H) chart is beneficial. Here, the pair has managed to cross below the 4H chart bullish flag. The Relative Strength Index (RSI) and Awesome Oscillator support short traders by indicating bearish momentum.
If the pair maintains its position below the 38.2% Fibonacci retracement level, it may target the 161.0 mark. However, if it exceeds the 163.0 mark, the recent breakout should be regarded as a false alarm, and we could expect the pair’s upward momentum to continue.
J.J Edwards is a finance expert with 15+ years in forex, hedge funds, trading systems, and market analysis.
