EUR/JPY is seeing positive momentum for the second consecutive day, pushing towards the mid-158.00s during the European session. However, conflicting expectations between the ECB and BoJ policies may hinder further upward movement. Traders are also cautious ahead of the upcoming ECB meeting on Thursday.
Recent data revealed a slight slowdown in Japan’s economic growth in the second quarter, coupled with stable equity markets, which has weakened the Japanese Yen (JPY) and supported EUR/JPY. Despite this, diverging policy stances between the ECB and BoJ could prevent traders from taking aggressive bullish positions and limit gains.
The ECB is likely to cut interest rates at its September meeting due to declining inflation in the Eurozone, while the market anticipates a potential BoJ rate hike by year-end. This suggests that confirming a bottom in the EUR/JPY pair and predicting further advances may require stronger buying signals.
Market participants are awaiting the ECB’s economic forecasts, which will influence the Euro’s short-term price dynamics and provide direction for EUR/JPY. However, the current fundamental landscape favors bearish sentiment, indicating that any upward movement could be short-lived and present selling opportunities.
Analysis and Conclusion
EUR/JPY is on a positive trajectory but faces resistance due to conflicting ECB-BoJ policy expectations. Traders should exercise caution and wait for stronger buying signals before considering long positions. The upcoming ECB meeting and economic forecasts will play a crucial role in shaping the pair’s future direction. Overall, the current market conditions suggest a bearish bias and potential selling opportunities in the EUR/JPY pair.
Economic Indicator: ECB Monetary Policy Statement
The European Central Bank’s (ECB) monetary policy decisions can impact the volatility of the Euro (EUR) and influence short-term trends. A hawkish stance is bullish for EUR, while a dovish outlook is bearish.
Next release: Thu Sep 12, 2024 12:15
Frequency: Irregular
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Source: European Central Bank