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 pertaining to the EURJPY pair.
Yen Strengthens Against the Dollar
Amidst a period of a generally weaker dollar, the Japanese yen has seen an uptick, surpassing the 151 mark against the dollar. This improvement comes as the US Federal Reserve has decided not to increase interest rates for the second consecutive time. Furthermore, there’s a growing belief that US interest rates may not rise any 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 been putting the yen at a disadvantage. 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 The central bank now describes the 1% as a flexible “upper bound” rather than a strict limit and has also withdrawn its commitment to buy bonds in unlimited quantities to defend this level.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 compared to the dollar, which is not doing so well right now. The US isn’t raising its interest rates, and people are worried about the economy slowing down, which also affects how much the dollar is worth. In Japan, the central bank is keeping its main interest rates really 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 Forecast: A Technical Analysis
The EURJPY technical analysis reveals that the currency pair is trading within a daily bullish channel. In the previous day’s candle, it tested the middle line of this channel. Today, the EURJPY experienced a pullback to the pivot. With the RSI indicator hovering above the 50 level, our EURJPY technical analysis suggests that it’s likely for the bulls to 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).
The main support for this bullish scenario in our EURJPY forecast is S1 (156.28). If this level breaks, it’s likely that the uptrend will end and we might witness a trend reversal. However, this scenario seems unlikely due to the Bank of Japan’s current interest policy.
Stay tuned for more updates and insights from our EURJPY technical analysis.
J.J Edwards is a finance expert with 15+ years in forex, hedge funds, trading systems, and market analysis.