In today’s comprehensive EURJPY forecast, we will first examine Japan’s current economic conditions. Then, we will meticulously delve into the details of the EURJPY pair’s technical analysis.
EURJPY Technical Analysis – Bank of Japan’s Stance
Bloomberg—Amidst a generally weaker dollar, the Japanese yen has seen an uptick, surpassing the 151 mark against the dollar. This improvement occurred because the US Federal Reserve decided not to increase interest rates for the second time.
Furthermore, there’s a growing belief that US interest rates may not rise further due to the looming concerns of a potential recession. This has had a knock-on effect on both the dollar’s value and Treasury yields.
Bank of Japan’s Stance
Even with the yen’s recent rise, it’s still hovering near the low points it experienced back in 1990. The decline earlier in the week was significant, following the Bank of Japan’s (BOJ) slight shift in policy regarding long-term interest rates—a move viewed as too modest to bridge the longstanding interest rate differential that has disadvantaged the yen.
The BOJ has chosen to maintain its policy rate at -0.1%, and the target for 10-year Japanese government bond (JGB) yields at roughly 0%. However, the BOJ did tweak its approach to yield curve control. The central bank now describes the 1% as a flexible “upper bound” rather than a strict limit and has also withdrawn its commitment to buy bonds in unlimited quantities to defend this level.
In simpler terms, the Japanese yen has gotten stronger than the dollar, which is not doing so well now. The US isn’t raising its interest rates, and people are worried about the economy slowing down, affecting the dollar’s worth. In Japan, the central bank keeps its main interest rates low and hasn’t changed much about how it manages its government bonds, even though the yen isn’t as strong as it used to be.
EURJPY Technical Analysis
The EURJPY technical analysis reveals that the currency pair trades within a daily bullish channel. The previous day’s candle tested the middle line of this channel. Today, the EURJPY experienced a pullback to the pivot.
With the RSI indicator hovering above 50, our EURJPY technical analysis suggests that the bulls will likely push the EURJPY price to R1 (162.7). This could be followed by a move towards the upper line of the channel or R2 (165.0).
Our EURJPY forecast’s main support for this bullish scenario is S1 (156.28). If this level breaks, the uptrend will likely end, and we might witness a trend reversal. However, this scenario seems unlikely due to the Bank of Japan’s current interest policy.
J.J Edwards is a finance expert with 15+ years in forex, hedge funds, trading systems, and market analysis.
