CFD Trading Rate Euro vs Japanese Yen (EURJPY)

• EUR/JPY rallies to near 164.50 even though a few ECB officials see key borrowing rates declining below the neutral rate.
• ECB officials worry about growing Eurozone economic risks.
• Investors will focus on BoJ Ueda’s speech for fresh interest rate guidance.

The EUR/JPY pair posts a fresh 14-week high near 164.50 in Wednesday’s European session. The cross soars even though a few European Central Bank (ECB) officials see the Deposit Facility Rate falling below neutral levels, which is currently at 3.25% after three interest rate cuts this year.

ECB officials see more interest rate cuts as appropriate as they worry that inflationary pressures in the Eurozone could remain below 2% due to poor economic growth. Eurozone’s largest nation, Germany, is expected to end the current year with a decline in the output by 0.2%, predicted by the German economic ministry. This would be the second straight year of contraction in a row.

According to economists, the ECB neutral rate is around 2% or 2.25%, Reuters reported. ECB funds rate heading below the neutral rate suggests the central bank to continue easing in 2025. Meanwhile, traders have already priced in one more interest rate cut in the December meeting. This has weakened the Euro (EUR) against its major peers.

However, market participants have underpinned the Euro against the Japanese Yen (JPY) amid growing uncertainty over whether the Bank of Japan (BoJ) will hike interest rates further this year. In the last policy meeting, BoJ members didn’t offer any cues about potential rate hikes in the remainder of the year. The next BoJ policy meeting is scheduled for October 31 in which market participants expect the central bank to leave interest rates unchanged, with US election risks looming large.

In today’s session, investors will pay close attention to BoJ Governor Kazuo Ueda’s speech at the International Monetary Fund (IMF)-hosted “Governors Talk” for fresh guidance on interest rates.

• EUR/JPY trades near the top of a ten-week range as the Euro remains supported by ECB Kazimir’s comments. 
• Kazimir said the governing council would be watching the data closely in December and decide then what to do. 
• The Yen comes under pressure as analysts see it at fair value and the governing ADP party underperforms in opinion polls. 

EUR/JPY is trading at the top of a ten-week range in the upper 162.00s on Monday as the Euro (EUR) retains strength after comments from a European Central Bank (ECB) official suggested policymakers may not be in such a rush to lower interest rates whilst the Japanese Yen (JPY) remains under pressure following the release of lower-than-expected inflation data last week. 

ECB policymaker and Slovakian central bank Governor Peter Kazimir noted on Monday that the December policy meeting is wide open, with all options remaining on the table. "If new information points in the direction of higher inflation risks, we can still slow down the pace at which we remove restrictions in the coming meetings," he said. 

Kazimir also said that the ECB will be in a "strong and comfortable position" to continue the policy-easing cycle if the accelerated pace in disinflation is confirmed, per Reuters.

His comments follow more dovish market assessments of the trajectory of interest rates in the Eurozone after the ECB’s decision to cut its prime rates by 25 basis points (bps) (0.25%) at its meeting last Thursday. 

Many analysts saw the ECB’s decision to enact two rate cuts in a row as a sign that the bank was accelerating its easing cycle and would therefore be likely to follow up with a cut and each of its next meetings until it had brought interest rates down to the “neutral level” of around 2.00%.

EUR/JPY keeps its upside as the Yen remains under pressure after opinion polls show the ruling ADP party lacks support and risks being replaced by the opposition who are likely to pursue a low-interest rate policy, according to Bloomberg News. The expectation of lower interest rates is likely to be negative for the Yen as it increases foreign capital outflows. 

According to analysts at Scotiabank the Yen may be more or less at the level of its fair value, “The spot US Dollar/Yen is about where it should be, according to our fair value estimate (150.20).” They said in a recent note. The next main event for the Yen could be Bank of Japan (BoJ) Governor Ueda speaking at an International Money Fund (IMF) event on Wednesday.

Lower-than-expected Japanese inflation data released on Friday showed that Japan’s headline and core inflation rates slowed to a five-month low of 2.5% and 2.4%, respectively, in September. This could encourage the BoJ to keep interest rates low, further weighing on the Yen (supporting EUR/JPY).  

The Yen’s recent bout of weakness prompted Japan’s top currency diplomat Atsushi Mimura to reiterate government warnings that they are closely watching currency moves and that excess volatility is undesirable. Japanese authorities intervened in the currency markets earlier this year. 

• EUR/JPY edges lower to near 162.15 in Monday’s early European session, down 0.20% on the day. 
• A dovish ECB could undermine the shared currency in the near term. 
• BOJ policymaker said the bank must scrutinize risks and avoid premature rate hikes. 

The EUR/JPY cross attracts some sellers to around 162.15 during the early European session on Monday. The dovish tone of the European Central Bank (ECB) officials continues to weigh on the Euro (EUR) against the Japanese Yen (JPY). Investors will focus on ECB President Christine Lagarde's speech on Tuesday for fresh catalysts. 

The rising speculation that the ECB may accelerate its pace of policy easing could exert some selling pressure on the EUR. The ECB lowered the deposit rate by a further 25 basis points (bps) at its October meeting. President Christine Lagarde said during the press conference that there is “probably” more downside than upside risk to the ECB’s inflation forecast. 

Lagarde added that the central bank will not pre-commit to any particular rate path and would analyze all available data between now and December before deciding the next steps. ECB policymaker Francois Villeroy de Galhau said on Saturday that the Euro-area consumer price growth probably will be at the ECB’s 2% target in early 2025, per Bloomberg.

On the other hand, the verbal intervention from Japanese authorities supports the JPY. On Friday, Japan's top currency diplomat, Atsushi Mimura, stated that the officials will monitor the foreign exchange moves with a high sense of urgency. 

Nonetheless, the uncertainty over the timing and pace of further rate hikes by the Bank of Japan (BoJ) should cap the upside for the JPY and create a tailwind for EUR/JPY. The BoJ policymaker Seiji Adachi said last week that the Japanese central bank must raise interest rates at a "very moderate" pace and avoid hiking prematurely. 

• EUR/JPY has failed to break out above the top of its range high and has pulled back down to support. 
• If the pair continues lower and breaks below a key trendline it will probably signal a new down leg within the range.  

EUR/JPY declines after multiple failed attempts to break out of the top of its range high. 

The down move has stalled at the level of the trendline for the move up from the mid-September lows. Another break below the trendline and the previous day’s lows would confirm a new move lower within the pair’s multi-month range. 

EUR/JPY 4-hour Chart 

Given the pair’s long-standing adherence to the confines of the range it will probably next start moving lower as it continues to respect its guardrails. 

EUR/JPY has broken below 161.91 (October 8 low) helping to confirm the start of a bearish leg. A break below the 161.85 low of Thursday, would provide stronger confirmation. Such a break could eventually reach the next downside target at the range floor of about 158.32 – the October 1 as well as September 30 lows.

The Relative Strength Index (RSI) has fallen below the 50 mid level which suggests fairly strong downside momentum accompanied the most recent sell off. This is a sign of mild underlying weakness in the pair.

Alternatively, it is also still possible that EUR/JPY might break out above its range. Such a break would need to be decisive to inspire confidence. A decisive move would be one characterized by a longer-than-average green candlestick which cleared the range high and closed near its high, or three green candles in a row breaking above the top of the range.

• EUR/JPY remains steady with downside risks amid verbal intervention from Japanese authorities.
• Japan’s Atsushi Mimura stated that recent Yen movements have been "somewhat rapid and one-sided."
• The Euro faced challenges as the ECB reduced its Rate on Deposit Facility to 3.25%.

The EUR/JPY pair remains stable around 162.60 during early European trading on Friday. The Japanese Yen (JPY) finds support from verbal interventions by Japanese authorities. A government spokesman stressed the importance of stable currency movements that align with economic fundamentals, emphasizing that officials are closely monitoring exchange rate fluctuations, especially any speculative activity, with increased vigilance.

Japan’s Vice Finance Minister for International Affairs, Atsushi Mimura, also commented on Friday that the recent Yen movements have been "somewhat rapid and one-sided." Mimura underscored that excessive volatility in the foreign exchange market is undesirable.

Meanwhile, Japan’s National Consumer Price Index (CPI) slowed to a year-on-year rate of 2.5% in September. The Core CPI, which excludes fresh food prices, dropped to 2.4%, down from a 10-month high of 2.8%.

The Euro came under downward pressure after the European Central Bank's (ECB) policy decision on Thursday. The ECB lowered its Main Refinancing Operations Rate and the Deposit Facility Rate by 25 basis points to 3.40% and 3.25%, respectively, in line with market expectations.

These consecutive rate cuts by the ECB in 13 years, lowered the Deposit Facility Rate to 3.25%. The decision comes in response to a sharp decline in inflation, which had surged to a peak of 10.6% in October 2022 but fell to 1.7% in September, now below the ECB’s 2% target.

During the post-meeting press conference, ECB President Christine Lagarde left the markets uncertain about the timing of future rate cuts, though she reassured that the Eurozone economy is on course for a soft landing.

• EUR/JPY trades sideways near 162.50 with ECB policy in focus.
• Investors expect the ECB to cut interest rates again by 25 bps.
• The next move in the Japanese Yen (JPY) will be projected by the National CPI data for September.

The EUR/JPY pair trades in a tight range around 162.50 in Thursday’s European session. The cross consolidates as investors have sidelined ahead of the European Central Bank’s (ECB) interest rate decision, which will be announced at 12:15 GMT.

The ECB is widely anticipated to reduce the Rate on Deposit Facility by 25 basis points (bps) to 3.25%. This would be the second consecutive interest rate cut by the ECB in a row.

A shift in focus of ECB officials to economic stagnation in the Eurozone from taming price pressures is the major reason behind firm ECB rate cut bets. The Eurozone economy is going through a rough phase due to weakening demand from domestic and overseas markets. Meanwhile, growing speculation for former US President Donald Trump winning presidential elections, which will take place on November 5 has also dampened the Eurozone’s outlook.

Trump is expected to elevate import tariffs, which could hurt exports from the old continent and make their economic prospects more vulnerable.

Meanwhile, the annual Eurozone Harmonized Index of Consumer Prices (HICP) has decelerated to 1.7% in September, according to the revised estimate.

In the Japanese region, investors await the National Consumer Price Index (CPI) data for September, which will be published on Friday. The inflation data will influence market speculation for the Bank of Japan’s (BoJ) interest rate outlook. Economists expect the National CPI ex Fresh Food to have grown by 2.3%, slower than 2.8% in August.

• EUR/JPY drifts lower amid bets for another ECB interest rate cut later this Thursday.
• The BoJ uncertainty and a positive risk tone cap the JPY, lending support to EUR/JPY.
• Traders keenly await the ECB rate decision and cues about the further policy path.

The EUR/JPY cross attracts fresh sellers during the Asian session on Thursday, with bears still awaiting a sustained break below the 162.00 mark before positioning for an extension of the recent pullback from the 163.55-163.60 supply zone. 

The shared currency continues to be undermined by firming expectations that the European Central Bank (ECB) will cut the deposit rate by 25bps later today, marking the first back-to-back rate reduction in 13 years. This will reflect the ECB's urgency to accelerate monetary amid easing inflationary pressures in the Eurozone and signs of economic weakness. Meanwhile, the risk of a further escalation of geopolitical tensions in the Middle East and a broader regional war drives some haven flows towards the Japanese Yen (JPY). This further contributes to the offered tone surrounding the EUR/JPY cross. 

Meanwhile, data published by Japan's Ministry of Finance on Thursday showed that total exports in September declined for the first time in 10 months and raised concerns about weakness in global demand. Against the backdrop of a surprise opposition to further rate hikes by Japan's Prime Minister Shigeru Ishiba, the outlook complicates the Bank of Japan's (BoJ) plans to exit years of ultra-easy monetary policy. This, in turn, holds back the JPY bulls from placing aggressive bets and should help limit any further depreciating move for the EUR/JPY cross heading into the key central bank event risk. 

Apart from the widely-anticipated rate cut decision, investors will keep a close eye on the updated economic projections. This, along with ECB President Christine Lagarde's comments during the post-meeting conference, will influence market expectations about the policy direction in 2025 and the Euro. Furthermore, geopolitical developments, which play a key role in driving demand for the safe-haven JPY, should allow traders to grab short-term opportunities around the EUR/JPY cross.

• EUR/JPY is correcting lower after another test of the top of its ten-week range. 
• The pair could begin falling within the range if it passes various confirmation levels. 

EUR/JPY pulls back after testing the top of its ten-week range. The pair is in a sideways trend with the odds favoring a continuation in line with technical analysis trend theory. 

EUR/JPY 4-hour Chart 

EUR/JPY’s next move will probably be down, therefore, towards the range floor in the 154s. 

A break below 161.91 (October 8 low) would help confirm such a move, and a breach of the trendline for the up leg at around 161.80 (black line on chart) would provide stronger confirmation. The next downside target lies at about 158.32 – the October 1 as well as September 30 lows. 

The Moving Average Convergence Divergence (MACD) momentum indicator is diverging bearishly with price (red dotted lines on chart). Whilst price has been making slightly higher highs with each breakout attempt, MACD has been declining. This is a further warning sign of losses to come.

Alternatively, it is possible that EUR/JPY breaks out above the range. Such a break would need to be decisive to inspire confidence. A decisive move would be one characterized by a longer-than-average green candlestick which cleared the range high and closed near its high, or three green candles in a row breaking above the top of the range.

• EUR/JPY continues trying but failing to breakout above the top of a range. 
• MACD is diverging bearishly with price and there is a strong possibility of decline unfolding. 

EUR/JPY is meeting a brick wall of resistance at the top of its ten-week range and despite repeated attempts has not been able to breakout higher. 

EUR/JPY 4-hour Chart 

The pair is in an overall range-bound market – its trend is sideways. Since it is a principle of technical analysis that trends tend to extend, the odds favor a continuation of the range. 

This suggests that the next move for EUR/JPY will be back down towards the range floor in the 154s. 

A move below 161.91 (October 8 low) would help confirm such a move was underway. A break below the trendline for the up leg at around 161.70 (black line on chart) would provide stronger confirmation. The next downside target for EUR/JPY would be at about 158.32 – the October 1 as well as September 30 lows. 

The Moving Average Convergence Divergence (MACD) momentum indicator is diverging bearishly with price (red dotted lines on chart). Whilst price has been making slightly higher highs with each breakout attempt, MACD has been declining. This is a further warning sign of losses to come.

Alternatively, it is possible that a decisive break above the range highs would indicate a breakout higher and the evolution of a new short-term uptrend. A decisive move would be one characterized by a longer-than-average green candlestick which cleared the range high and closed near its high, or three green candles in a row breaking above the top of the range. 

• EUR/JPY is testing the top of a multi-week range and could be about to reverse and fall. 
• Although price action has not yet reversed, the MACD is diverging bearishly with price.  

EUR/JPY tests the top of a nine-and-a-half-week range at around 163.50 as it continues unfolding its short-term sideways trend. 

EUR/JPY 4-hour Chart 

Given the principle of technical analysis that “the trend is your friend” the odds favor a continuation of this sideways mode. If so, then the next move for EUR/JPY will probably be a decline back down towards the range floor in the 154s. 

There are no reversal signs from the actual price yet, however, and it is too early to say with any confidence if the pair will break lower. A move below 161.91 (October 8 low) would be required to supply the additional bearish confirmation. For stronger confirmation price must break below the trendline for the up leg at around 161.70 (dotted black line on chart). The next downside target for EUR/JPY would be at about 158.32 – the October 1 as well as September 30 lows.

The Moving Average Convergence Divergence (MACD) momentum indicator is diverging bearishly with price (red dotted lines on chart). Whilst price is making higher highs, MACD is  declining. This is further evidence a downside move could be about to unfold.

On the other hand, a decisive break above the range highs would indicate a breakout of the range and the evolution of a new short-term uptrend. A decisive move would be one characterized by a longer-than-average green candlestick which cleared the range high and closed near its high, or three green candles in a row breaking above the top of the range.

• EUR/JPY has rallied up to the top of a medium-term range and risks rolling over as the mode extends. 
• MACD momentum is declining steadily suggesting underlying weakness. 

EUR/JPY rises up and almost touches the top of its nine-week range before treading water indecisively as traders await the next catalyst that will decide its future direction. 

EUR/JPY 4-hour Chart 

The pair is probably in a short-term sideways trend and given the guiding principle of technical analysis that “the trend is your friend”, this would suggest an extension of that sideways mode. If so, then the next move for EUR/JPY is likely to be back down towards the base of the range in the 154s. 

However, there are no reversal signs from price yet and so it is too early to say with any confidence that the pair will fall. A break below 161.00 would be required to supply the additional bearish confirmation to confirm such a down leg. The next downside target for EUR/JPY is at about 158.32 and the October 1 as well as September 30 lows. 

The Moving Average Convergence Divergence (MACD) momentum indicator is diverging bearishly with price. Although the MACD is currently declining, price is oscillating, suggesting weak underlying momentum underpins current price action and tilts the odds marginally in favor of more downside.

• EUR/JPY drops but remains focused on breaking above the key resistance of 163.50.
• Traders doubt the BoJ hiking rates again this year.
• The ECB is expected to cut its borrowing rates further by 50 bps this year.

The EUR/JPY pair falls to near 162.80 in Thursday’s European session after its second failed attempt to break above the September high of 163.50. The asset strives to extend its upside amid broader weakness in the Japanese Yen (JPY) due to fading speculation of more hikes from the Bank of Japan (BoJ) this year.

Traders appear to be cautious about the BoJ tightening its policy further this year as weak consumer spending has raised doubts over the maintenance of economic strength. Overall Household Spending, a key measure of consumer spending, declined by 1.9% in August from a nominal growth of 0.1% in July. Though the pace at which the consumer spending measure contracted in August was slower than expectations of a 2.6% decline, it prompted the need for fresh stimulus to boost private consumption.

Meanwhile, the Euro (EUR) has been underpinned against the Japanese Yen, its performance has remained weaker in comparison with other peers due to escalating European Central bank (ECB) dovish bets. Traders have priced in two more rate cuts of 25 basis points (bps) by the ECB this year, suggesting that the central bank will cut its Deposit Facility Rate in both the remaining meetings, which are scheduled for next week and in December.

A majority of ECB policymakers are open to more interest rate cuts as fears of inflation remaining sticky have waned due to worsening economic growth. The Annual Harmonized Index of Consumer Prices (HICP) in the Eurozone has decelerated to 1.8% in September, according to flash estimates. Also, the German economy, the Eurozone’s largest nation, is estimated to end the year with a 0.2% decline in output, as per the German economic ministry.

• EUR/JPY pulls back just before almost reaching the top of a medium-term range. 
• It may yet rally to the range ceiling or roll over as the sideways trend extends.  

EUR/JPY almost reaches the top of its nine-week-long range before stalling and unfolding a shallow pullback down to the mid 162s. 

EUR/JPY 4-hour Chart 

Given the shallowness of the pullback there remains a chance EUR/JPY could resume its up move and finally reach the top of the nine-week range in the 163.80s. 

However, the Moving Average Convergence Divergence (MACD) momentum indicator is crossing below its signal line, giving a sell signal and this could result in a reversal lower. 

The pair is in a short-term sideways trend most probably, which given the guiding principle of technical analysis that “the trend is your friend”, would suggest an extension of the sideways mode. If so, then the next move for EUR/JPY is likely to be back down towards the base of the range in the 154s. 

It is too soon to say with any confidence if this will happen, however, as there are no reversal signs from price itself, only the MACD. It is possible EUR/JPY could make a last rally higher before rolling over and beginning a new down leg in earnest. A break below 161.00 would supply additional bearish confirmation such a move was starting.

• EUR/JPY declines almost half a percent after the release of weaker-than-expected Retail Sales and Factory Orders. 
• Verbal intervention by Japanese officials stems JPY’s slow depreciation and adds to EUR/JPY’s downside. 
• A decline in German Factory Orders revives fears the country may be entering a recession. 

EUR/JPY trades down almost half a percent in the 162.50s on Monday as it closes in on the ceiling of its multi-week trading range from the early August lows. Bears are driving the Euro (EUR) lower following the release of lackluster macroeconomic data for the region. 

The pair faces further headwinds as the Japanese Yen (JPY) firms up following verbal intervention by the Japanese FX diplomat Atsushi Mimura who, seeing the currency’s recent weakness – especially against the US Dollar (USD) – cautioned against speculative moves. Continued demand for the Yen as a safe-haven amid an escalation in geopolitical risk stemming from the conflict in the Middle East further underpins the Japanese currency and adds down-side pressure to EUR/JPY.

Traders opt to sell the Euro on Monday after the release of Eurozone Retail Sales showed only a 0.80% annual rise in August which was weaker than the 1.0% expected, but higher than the 0.1% decline in July. German Factory Orders, meanwhile, declined by 5.8% on a seasonally adjusted basis in August, which was well below the 2.0% decline expected and the upwardly-revised 3.9% rise of the previous month. The data adds further veracity to the view that the country is sliding into a recession. 

EUR/JPY is likely to see its untidy progress higher capped by rising expectations that the European Central Bank (ECB) will cut interest rates at its meeting next week. Lower interest rates are usually negative for a currency as they reduce foreign capital inflows. 

ECB Governing Council member François Villeroy de Galhau said overnight that the ECB will “quite probably” cut interest rates at the meeting, adding the ECB has to pay attention to the risk of undershooting its 2.0% inflation target “due to a weak growth and a restrictive monetary policy for too long.” His comments “support market pricing for a total 150 bp of easing over the next 12 months” according to analysts at Brown Brothers Harriman (BBH).  

Most recently the Eurozone Harmonized Index of Consumer Prices (HICP) showed prices rose by 1.8% in September from 2.2% previously and below the 1.9% forecast, according to Eurostat. Core HICP fell to 2.7% from 2.8% previously and the same expected. The undershooting inflation data backs up comments from the ECB President Christine Lagarde who hinted that inflation was falling back to the central bank’s 2.0% target, as expected. "The latest developments strengthen our confidence that inflation will return to target in a timely manner," she said last week.

EUR/JPY had been on the rise last week after Japan’s new Prime Minister Shigeru Ishiba and his Economy Minister Ryosei Akazawa caution before raising interest rates given the “current economic conditions”. This wrong-footed markets which had expected him to take a neutral approach. 

• EUR/JPY drops sharply to near 162.70 as swelling ECB rate cut bets weigh on the Euro.
• ECB Villeroy warned about rising risks of Eurozone economic slowdown.
• Middle East tensions led to higher safe flows in favor of the Japanese Yen.

The EUR/JPY pair falls sharply from the seven-week high around 163.50 to near 162.70 in Monday’s European session. The cross weakens as the Euro (EUR) faces pressure amid rising speculation that the European Central Bank (ECB) could cut its key borrowing rates further in its policy meeting on October 17.

The ECB cut its Rate on Deposit Facility by 25 basis points (bps) to 3.5% on September 12. This was the ECB’s second dovish decision of its current policy-easing cycle. And, now more rate cuts are expected from the ECB this month as officials worry about growing risks of monetary policy remaining restrictive for too long, which suggests weak economic growth with confidence over inflation declining to the bank’s target of 2%.

This weekend, ECB policymaker and French Central Bank Chief François Villeroy de Galhau said in an interview with La Repubblica, "If we are next year sustainably at 2% inflation, and with still a sluggish growth outlook in Europe, there won’t be any reason for our monetary policy to remain restrictive, and our rates to be above the neutral rate of interest."

Meanwhile, a faster-than-expected slump in German Factory Orders in August has also pointed to weakening demand and the need for further policy-easing. Annually, Factory Orders declined by 3.9% after growing by 4.6% in July. Month-on-month new Factory Orders contracted at a faster-than-expected pace of 5.8%.

On the Tokyo front, conflicts between Israel and Iran in the Middle East region have resulted in safe flows to the Japanese Yen (JPY). The Japanese currency is also strengthened by renewed fears of a possible intervention as suggested by Japan's Finance Ministry's Vice Finance Minister for International Affairs Atsushi Mimura’s speech in Monday’s Asian session.

• EUR/JPY attracts some sellers on Friday and reverses a part of its recent gains to the weekly top.
• A combination of factors revives the JPY demand and exerts downward pressure on the cross. 
• Dovish ECB bets contribute to the fall, though the BoJ rate hike uncertainty might limit losses.

The EUR/JPY cross meets with some supply during the Asian session on Friday and for now, seems to have snapped a two-day winning streak to the weekly peak, around mid-162.00s touched the previous day. The downfall is sponsored by the emergence of some buying around the Japanese Yen (JPY) and drags spot prices to the 161.20 area, or a fresh daily low in the last hour.

Asahi Noguchi, a dovish Bank of Japan (BoJ) board member said on Thursday that the central bank has scope to raise interest rates further but must move cautiously and slowly to avoid hurting the economy. This comes on top of a further escalation of geopolitical tensions in the Middle East and the risk of a full-out war, which drives some flows towards the safe-haven JPY and turns out to be a key factor weighing on the EUR/JPY cross. 

The shared currency, on the other hand, remains depressed amid bets that the European Central Bank (ECB) will cut rates again in October on the back of easing inflationary pressures and economic slowdown. In fact, data released earlier this week showed that the Eurozone inflation fell to 1.8% in September, below the ECB's 2% target. This contributes to the offered tone surrounding the EUR/JPY cross and supports prospects for further losses. 

That said, the uncertainty over future interest rate hikes by the BoJ might hold back the JPY bulls from placing aggressive bets and help limit the downside for the currency pair. Japan's new Prime Minister Shigeru Ishiba said earlier this week that Japan is not in an environment for an additional rate increase. Moreover, Japan's Economy Minister Ryosei Akazawa stated that the PM and the BoJ both agree that overcoming deflation is Japan's highest priority.

The aforementioned mixed fundamental backdrop warrants some caution for bearish traders and makes it prudent to wait for strong follow-through selling before positioning for any further depreciating move. From a technical perspective, the formation of a 'Death Cross' on the daily chart – the 50-day Simple Moving Average (SMA) crossing below the 200-day SMA – suggests that the path of least resistance for the EUR/JPY cross remains to the downside.

• EUR/JPY holds positive ground near 161.85 in Thursday’s early Asian session.
• Japan’s PM Ishiba’s dovish turn exerts some selling pressure on the Japanese Yen.
• Investors expect the ECB to cut the rates in the October meeting.

The EUR/JPY cross gains traction to around 161.85 during the early European session on Thursday. The Japanese Yen (JPY) weakens as Japan’s Prime Minister Shigeru Ishiba said that the country is not ready for a rate hike.

Prime Minister Shigeru Ishiba said after a meeting with Bank of Japan (BoJ) Governor Kazuo Ueda on Wednesday that Japan is not in an environment for a further rate increase. Traders reduce their bets on a near-term interest rate hike following Ishiba's remarks.

Meanwhile, Ueda stated that the Japanese central bank would move cautiously about the monetary policy in the future. BOJ board member Asahi Noguchi said on Thursday that the central bank should continue its accommodative monetary policy for the time being, adding that it would take time to shift the perception that prices will not rise significantly in the future. Traders are now pricing in less than 50% odds that the BoJ would hike by 10 basis points (bps) before the year-end, according to LSEG data.

The rising speculation that the European Central Bank (ECB) will cut interest rates in October might undermine the Euro (EUR) and cap the upside of the cross. Earlier this week, the Eurozone inflation fell to 1.8% YoY in September, below the central bank's 2% target. ECB policymaker Martins Kazaks said on Wednesday that the central bank has a "clear-cut" argument for rate reduction at its next meeting as the Eurozone's economy might reach a tipping point.

• EUR/JPY weakens to near 158.80 in Wednesday’s early European session, down 0.06% on the day. 
• The negative outlook of the cross prevails, with the bearish RSI indicator. 
• The immediate resistance level emerges at 161.80; the first support level is seen at 158.10.

The EUR/JPY cross extends its downside to around 158.80 during the early European session on Wednesday. The risk-aversion across global markets provides some support to the safe-haven asset like the Japanese Yen (JPY). 

Technically, EUR/JPY keeps the bearish vibe unchanged on the daily chart as the cross holds below the key 100-day Exponential Moving Averages (EMA). Furthermore, the downward momentum is supported by the Relative Strength Index (RSI), which stands below the midline near 45.80, suggesting that there could still be room for further downward movement in the near term. 

The low of September 30 at 158.10 acts as an initial support level for the cross. A breach of this level will see a drop to 155.60, the lower limit of the Bollinger Band. Extended losses could pave the way to 154.41, the low of August 5. 

On the other hand, the first upside barrier emerges at 161.80, the upper boundary of the Bollinger Band. Any follow-through buying above the mentioned level could see a rally to 163.15, the 100-day EMA. The additional upside filter to watch is the 164.00 psychological mark.  

EUR/JPY daily chart

• EUR/JPY falls after the release of lower-than-expected Eurozone inflation data. 
• Cooling inflation suggests the ECB will be more likely to cut interest rates, leading to outflows for the Euro. 
• The Japanese Yen weakens itself after a fake rally following Ishiba’s victory as he adopts an accommodative stance. 

EUR/JPY trades just over a third of a percent lower on Tuesday, in the 159.30s. The pair declines after the release of Eurozone inflation data shows lower-than-expected inflation in the bloc, which suggests the European Central Bank (ECB) will be more likely to cut interest rates in future meetings. This, in turn, is likely to lead to outflows of capital and a weaker Euro.

The Eurozone Harmonized Index of Consumer Prices (HICP) came out at 1.8% in September from 2.2% previously and 1.9% forecast, according to Eurostat. Core HICP fell to 2.7% from 2.8% previously and the same expected. The data backs up comments from the ECB President Christine Lagarde who hinted that inflation was falling back to the central bank’s 2.0% target, as expected. "The latest developments strengthen our confidence that inflation will return to target in a timely manner," she said on Monday.

EUR/JPY had been rising at the start of the week after Japan’s incoming Prime Minister, Shigeru Ishiba wrong-footed markets which had expected him to take a neutral approach. The Yen rallied after the news of Ishiba’s victory over rival Sanae Takaichi due to Takaichi’s explicit favoring of a weak Yen to help Japanese exporters. However, on Monday Ishiba said that monetary policy ought to be kept accommodative (interest rates low) because the economic conditions didn’t warrant higher rates. His comments took investors by surprise and gave EUR/JPY a lift. 

The Japanese Jibun Manufacturing Purchasing Manager Index (PMI) showed a slight rise in manufacturing activity, pushing up to 49.7 in September according to data released on Tuesday during the Asian session, which was higher than the 49.6 in the previous month, and expectations of the same. The data, though still in contraction territory, may have further put pressure on EUR/JPY.