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EURJPY Forecast – November-23-2023

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FxNews – In today’s EURJPY forecast, we observe a notable uptrend following the pair’s interaction with the median line of the bullish flag, which plays a pivotal role in supporting the main trend. The RSI indicator’s movement above the 50 mark lends additional support to EURJPY buyers. As long as the median line of the flag remains intact, the target area is projected around 164.27.

EURJPY Forecast - November-23-2023

EURJPY technical analysis – 4H Chart

Conversely, should the EURJPY pair close below and stabilize beneath the median line of the flag, it could signal a continuation of the decline that began in mid-November. In this scenario, the initial target could be set at 160.53, followed by a potential further drop to 159.37.

EURJPY Fundamental Analysis

Reuters – Recently, the Japanese Yen has seen a decline in value, dipping to approximately 149 per dollar. This change comes after a period where the Yen was performing strongly, reaching two-month highs. The shift can be linked to the latest insights from the US Federal Reserve. The minutes from the Fed’s last meeting suggest a continued tight monetary policy, indicating that interest rates are not expected to decrease in the near future.

Several factors are contributing to this situation. Globally, slowing demand is affecting economies worldwide, including Japan. Domestically, investors are closely monitoring upcoming economic indicators. These include preliminary figures for manufacturing and service sectors, as well as inflation data, all of which play a crucial role in shaping Japan’s economic and monetary policies.

Japan’s Economic Challenges

Q3 Economic Contraction: Japan’s economy experienced a more significant contraction than anticipated in the third quarter (Q3). This downturn is attributed to the dual pressures of decreasing global demand and rising domestic inflation. Such economic conditions can have various impacts, including reduced consumer spending and challenges for businesses.

Bank of Japan’s Stance: In response, the Bank of Japan (BOJ) has reiterated its commitment to supportive monetary policies. This includes minor adjustments to yield curve controls, redefining the 1% target for 10-year Japanese Government Bonds (JGBs) as a flexible upper limit rather than a strict cap. Additionally, the BOJ has withdrawn its promise to purchase an unlimited amount of bonds to defend this level.

Economic Implications

The Yen’s depreciation can have mixed effects on the economy. A weaker Yen makes Japanese exports more competitive globally, potentially boosting the export sector. However, it also increases the cost of imports, which can exacerbate inflationary pressures. Given these developments, the economic outlook for Japan remains cautious. The commitment to accommodative policies by the BOJ aims to stimulate the economy, but the effectiveness of these measures in the face of global economic challenges remains to be seen.

  • 23 November 2023
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