“EUR/JPY Hits Two-and-Half-Month Low as BoJ Rate Hike Bets Strengthen, ECB’s Dovish Outlook Weighs on Euro – Fifth Straight Day of Decline”
As the EUR/JPY cross continues its downward spiral for the fifth consecutive day, hitting a low not seen since May 6, investors are closely watching the impact of potential Bank of Japan (BoJ) interest rate hikes on the Japanese Yen (JPY). The risk-off sentiment in the market, highlighted by the recent drop in US equities and Asian markets, has also bolstered the JPY’s safe-haven status, pushing the EUR/JPY pair lower.
Concerns about a slowdown in the Chinese economy and disappointing global flash PMI data have dampened investor appetite for riskier assets. Additionally, the Eurozone’s economic conditions have shown signs of weakening, aligning with the European Central Bank’s (ECB) pessimistic view and raising expectations of a September interest rate cut. These factors have contributed to the bearish tone surrounding the EUR/JPY pair.
Technical selling following a breakdown through the 100-day Simple Moving Average (SMA) has further weighed on the pair. However, the Relative Strength Index (RSI) indicates slightly oversold conditions on the daily chart, suggesting a potential for a short-term bounce before any further decline.
Traders are advised to exercise caution and monitor the upcoming BoJ meeting, while also keeping an eye on the release of the German Ifo Business Climate data. Stay tuned for more updates on this evolving situation in the financial markets.