EUR/JPY Continues Positive Momentum
- EUR/JPY attracts buyers for the third straight day and climbs closer to the weekly top.
- The BoJ uncertainty continues to undermine the JPY and lends support to the cross.
- A neutral technical setup warrants caution for bulls amid the German political crisis.
The EUR/JPY cross is on an upward trajectory, building on its bounce from the weekly low of 163.25-163.20. This positive movement marks the third consecutive day of gains, pushing prices towards the top end of the weekly range around 164.60-164.65 during the European session today.
Factors Driving the EUR/JPY Movement
- The uncertainty surrounding the Bank of Japan’s rate-hike plans is weakening the Japanese Yen, supporting the EUR/JPY cross.
- Speculations of Japanese intervention in the FX market and a weaker risk sentiment are limiting losses for the JPY.
- The political crisis in Germany is weighing on the Euro, capping gains for the currency pair.
Technical indicators on the daily chart suggest caution for buyers, with resistance expected near the 165.00 psychological mark and the 200-day Simple Moving Average (SMA). A break above could lead the pair towards the 165.45 hurdle and eventually the 165.90-166.00 supply zone, potentially paving the way for a continuation of the uptrend.
Conversely, immediate support lies at the 164.00 round figure, with further downside protection at 163.25-163.20. A breach below this level could trigger selling pressure, pushing the pair towards the 162.50-162.45 region and potentially the 50-day SMA around 162.00-161.95.
EUR/JPY Daily Chart Analysis
Japanese Yen FAQs
What Determines the Value of the Japanese Yen?
The value of the Japanese Yen (JPY) is influenced by various factors such as the performance of the Japanese economy, the Bank of Japan’s policy decisions, yield differentials between Japanese and US bonds, and market sentiment.
How Does the Bank of Japan Impact the Yen?
The Bank of Japan plays a crucial role in controlling the value of the Yen through its monetary policy decisions. Interventions in the currency market are rare but can occur to manage the Yen’s value. Policy divergence between the BoJ and other central banks can affect the Yen’s exchange rate.
Why is the Yen Considered a Safe-Haven Investment?
The Japanese Yen is often viewed as a safe-haven currency, meaning investors seek it during times of market uncertainty for its stability. In turbulent times, the Yen’s value tends to strengthen against riskier currencies.
Analysis and Implications
The EUR/JPY cross is currently experiencing bullish momentum, driven by factors such as BoJ uncertainty, German political crisis, and technical considerations. Understanding these dynamics is crucial for investors and traders looking to capitalize on potential opportunities in the forex market.
For individuals new to finance, this analysis highlights the interconnected nature of global economies and how geopolitical events can impact currency movements. It underscores the importance of staying informed about economic indicators, central bank policies, and market sentiment to make informed investment decisions.