CFD Trading Rate Euro vs Japanese Yen (EURJPY)

• EUR/JPY is showing acute bearish divergence on the weekly chart compared to 2023. 
• This indicates the potential for a pullback on the horizon. 
• A negative close next week would provide further evidence of a correction forming.

EUR/JPY is in a long-term uptrend distinguished by the rising peaks and troughs in price on the weekly chart.

The pair’s price has formed a bearish divergence with the Relative Strength Index (RSI) in the current week when compared with the similar high in November 2023. 

Euro versus Japanese Yen: Weekly chart

Divergence occurs when price reaches a higher high but the RSI fails to follow. It is a sign of underlying weakness in the asset price and a precursor to a possible correction. In the case of EUR/JPY the new multi-year high reached this week was not accompanied by a higher high in the RSI when compared with the high in November 2023. 

The divergence is quite acute suggesting a stronger possibility it could indicate a subsequent bearish pullback in price.  

A natural target for a pullback if it develops would be the red 50-week Simple Moving Average (SMA) at 157.080. 

If the next week is bearish that would add credence to the view there will be a correction signaled by the divergence.

• The daily RSI was rejected near the overbought region.
• Hourly chart indicators show a shift in short-term dynamics, with sellers gaining ground.
• Despite the signs of potential short-term bearish correction, the pair still holds above key SMAs, denoting an overall bullish trend.

The EUR/JPY pair shows slight losses of 0.26% during Thursday's session. Despite sporadic fluctuations, there is a largely upward trend, indicating a strong position for buyers. Yet, recent subtle signs of selling pressure hint at a potential challenge to the continuity of the bullish trend for the next sessions.

On the daily chart, the Relative Strength Index (RSI) shows an overall positive trend. However, imminent overbought conditions suggest a possible downward retracement could soon emerge as buyers may continue taking profits. In addition, the Moving Average Convergence Divergence (MACD) continues to print green bars, suggesting a steady buying momentum

EUR/JPY daily chart

When examining the hourly chart, the RSI reveals some variability, with the latest reading at 47. This value is notably lower than the daily readings, suggesting that sellers might be gaining some ground in the short term. In addition, the MACD prints red bards which adds arguments to the growing selling pressure on the shorter timeframes.

EUR/JPY hourly chart

When analyzing with Simple Moving Averages (SMAs), the broader scale indicates that, despite a negative outlook in the short term, the pair maintains its position above the 20, 100, 200-day Simple Moving Averages, suggesting that, on a wider scope, the buyers are still firmly in control. However, if the technical correction extends below any of these levels the trend might slowly shift in favor of the seller.

• EUR/JPY trims gains near 165.15 amid renewed JPY demand. 
• The potential of another hike from BoJ before the end of the year lifts the Japanese Yen. 
• ECB's Lagarde said policymakers will consider cutting rates in June, as data available by June will confirm the path of inflation. 
• The German and Eurozone HCOB PMI for March are due on Thursday.

The EUR/JPY cross trades on a softer note above the 165.00 mark during the early European trading hours on Thursday. The downtick of the cross is supported by the possibility of another rate hike by the Bank of Japan (BoJ) and the fear of FX intervention from the Japanese authorities. Traders await the preliminary German and Eurozone HCOB Purchasing Managers Index (PMI) data for March for fresh impetus. At the press time, EUR/JPY is trading at 165.15, losing 0.03% on the day. 

The Bank of Japan (BoJ) hiked interest rates for the first time in 17 years on Tuesday, and investors are questioning if the BOJ will raise rates again this year and, if so, how much and how rapidly. Meanwhile, the Nikkei newspaper reported that an early rate hike allows for the potential of another hike before the end of the year. This, in turn, provides support for the Japanese Yen (JPY) against the Euro (EUR). 

Furthermore, the verbal intervention from the Japanese authorities might boost the JPY and cap the upside of the EUR/JPY in the near term. Early Thursday, Japanese Finance Minister Shunichi Suzuki said that he will watch foreign exchange moves with a high sense of urgency while adding that it's important for currencies to move in a stable manner. 

On the Euro front, European Central Bank (ECB) President Christine Lagarde stated on Wednesday that policymakers will consider cutting interest rates in the June meeting as data available by June will provide more insight into the inflation trajectory and the labor market condition. Money markets expect three rate cuts from the ECB by December, along with a potential fourth, according to Reuters. 

The HCOB Purchasing Managers Index (PMI) from Germany and the Eurozone is due on Thursday, followed by the German Buba Monthly Report. On Friday, the Japanese National Consumer Price Index (CPI) for February will be released. The Core CPI inflation ex Fresh Food is expected to show an increase of 2.8% in February from 2.0% in January. Traders will take cues from these events and find trading opportunities around the EUR/JPY cross. 

• EUR/JPY jumps to 164.50 amid uncertainty over BoJ’s holding the exit to negative interest rates.
• BoJ Ueda pledges to keep monetary policy accommodative for some time.
• ECB Lagarde is confident of gaining evidence that inflation will return to the 2% target.

The EUR/JPY rises to 164.50 in Wednesday’s early American session. The cross strengthens amid broad selling in the Japanese Yen after Bank of Japan (BoJ) Governor Kazuo Ueda didn’t provide guidance on future policy steps or the pace of policy normalization.

Apart from that, the BoJ pledges to keep its policy stance accommodative for the time being. The BoJ’s decision to exit its negative interest rate policy, along with the maintenance of an accommodative stance, indicates that the central bank is unsure that the wage growth cycle is strong enough to keep inflation sustainably above 2%.

Meanwhile, the Euro holds strength against the Japanese Yen despite European Central Bank (ECB) President Christine Lagarde delivering a slight dovish guidance on interest rates. ECB Lagarde said “The latest wage data points in an encouraging direction.” This indicates that the wage growth is getting consistent with the pace required to bring down inflation to the 2% target. Slowing wage growth would deepen expectations for the ECB to begin reducing interest rates from the June policy meeting.

Apart from that, Lagarde’s confidence that the central bank will get evidence of inflation easing to 2% has increased speculation for interest rates reducing from June. ECB Lagarde said, “In the coming months, we expect to have two important pieces of evidence that could raise our confidence level sufficiently for a first policy move.”

• The EUR/JPY rallied in Tuesday’s session, seeing more than 1% gains.
• The daily RSI reveals growing buying momentum, deep in positive territory.
• The hourly chart hints at overbought conditions, and the RSI staying above 70 signals the potential for profit-taking sell-offs.

In Tuesday's session, the EUR/JPY pair is trading around the 164.00 region, marking a strong rally of 1.14%. The daily outlook is tilting in favor of the buyers while overbought conditions seen on the hourly chart suggest that consolidation is on the horizon.

On the daily chart, the pair exhibits increasing momentum, as indicated by the latest Relative Strength Index (RSI) values. Moving from negative territory, the recent RSI trajectory consolidated in positive territory, lately peaking at 65 which is approaching overbought status. Currently, buyers dominate the market, leading to the possibility of the pair moving into overbought conditions soon.

EUR/JPY daily chart

When examining the hourly chart, the EUR/JPY pair displays persistent overbought conditions. The RSI values consistently stay strong and above 70 which suggests intense buying pressure. The Moving Average Convergence Divergence (MACD) reinforces this bullish momentum with its rising green bars. However, these overbought conditions might soon provoke a downward correction as overbuying could lead to profit-taking sell-offs.

EUR/JPY hourly chart

Conclusively, both the daily and hourly charts indicate robust buying momentum. The positive outlook is further corroborated by the pair trading above the main Simple Moving Averages (SMAs) of 20, 100, and 200 days. Any downward correction which keeps the pair above these levels, won’t affect the overall bullish trend.

• EUR/JPY holds positive ground around 162.77 after the BoJ rate decision. 
• BoJ decided to end a negative interest rate era that began in 2016, in line with market expectations.
• ECB’s de Cos said the central bank may start cutting rates in June if inflation in the eurozone continues to ease.
• Investors will focus on the German and Eurozone ZEW Survey on Tuesday.

The EUR/JPY cross gains traction above the mid-162.00s during the Asian trading hours on Tuesday. The cross drifts higher after the Bank of Japan (BoJ) decided to end a negative interest rate era that began in 2016, in line with market expectations. At press time, EUR/JPY is trading at 162.77, adding 0.37% on the day. 

After the two-day monetary policy meeting on Tuesday, the BoJ decided to raise the interest rate by 10 basis points (bps) from -0.1% to 0% for the first time since 2007. The decision was in line with market expectations. The BoJ policy statement showed that, given the current outlook for economic activity and prices, the BoJ anticipates accommodative financial conditions to be maintained for the time being. In response to the interest rate decision, the Japanese Yen attracts some sellers as the hawkish policy was widely priced in by the markets.

The European Central Bank (ECB) held the interest rate steady at its March meeting. However, the ECB policymakers signaled progress in easing inflation and started discussions about the timeline of the rate cut. The ECB Pablo Hernandez de Cos said that the central bank may start lowering interest rates in June if inflation in the eurozone continues to cool down. The ECB Governing Council member Klaas Knot penciled in June for a first-rate cut and expects three rate cuts this year.

Moving on, market players will focus on the German and Eurozone ZEW Survey, due later on Tuesday. Later this week, the German Producer Price Index (PPI) and the ECB's Lagarde speech will be in focus on Wednesday. On Thursday, the Eurozone HCOB PMI data for March will be released. These events could give a clear direction to the EUR/JPY cross. 

• EUR/JPY trades flat at start of week as widely telegraphed BoJ price hike priced in. 
• Eurozone data shows trade surplus in January and final estimates of inflation matching flash. 
• Japanese Yen hampered by fears BoJ interest rate hike may be a “one and done” affair.
   

EUR/JPY is trading little changed in the mid 162.00s on Monday after recording a small rise following the release of relatively upbeat Eurozone figures, which showed the region recording a trade surplus in January, and the final revisions of February inflation data matching flash estimates. 

The Japanese Yen (JPY), meanwhile, trades subdued ahead of the Bank of Japan’s (BoJ) policy meeting on Tuesday. Although the BoJ is expected to raise interest rates from negative territory (minus 0.1%) at the meeting – a move that would be positive for JPY since higher interest rates attract more foreign capital inflows – the news appears to have already been digested by markets ahead of the event.  

The lack of more JPY buying in the run up to the meeting could be put down to the view that the rate hike may be a “one and done” rather than the start of a cycle. Deflation remains a hard nut to crack in Japan and although a recent round of wage negotiations has resulted in higher pay for workers, price gains have been hard won and some skepticism remains as to the longer-term inflation outlook, according to Bloomberg News. 

It may also be the case that stubbornly high inflation in the euro area is adjusting the outlook for interest rates there which is supporting the Euro (EUR). It is possible the European Central Bank (ECB) will need to keep interest rates higher for longer when compared to prior expectations, and this is supporting the Euro and EUR/JPY. 

The final revisions for the Harmonized Index of Consumer Prices for the Eurozone on Monday were in line with flash estimates of 2.6% YoY and 0.6% MoM for headline inflation, and 3.1% YoY and 0.7% MoM for core inflation, according to data from Eurostat. These figures are still above the same metrics for Japan.

The non-seasonally adjusted Eurozone Trade Balance data showed a surplus of 11.4B in January versus the 16.8B of December, whilst the seasonally adjusted figures came out much higher, revealing a surplus in January of 28.1B against a deficit of 14.3B in December.

• EUR/JPY holds positive ground near 162.35 in Monday’s Asian session. 
• Several ECB policymakers expect the first rate cut in June meeting.
• Markets have different opinions on whether the BoJ will raise rates in March or in April.
• The Bank of Japan's (BoJ) monetary policy meeting on Tuesday will be a closely watched event for traders.

The EUR/JPY pair trades on a stronger note below the mid-162.00s during the Asian session on Monday. Investors increase their bets on the expectation that the Bank of Japan (BoJ) will end its ultra-dovish monetary policies in March or April. The Japanese central bank will announce its interest rate decision on Tuesday. At press time, EUR/JPY is trading at 162.35, losing 0.01% on the day.

Many European Central Bank (ECB) policymakers anticipate the first rate cut in its June meeting. ECB President Christine Lagarde signaled that June is the earliest it is likely to cut interest rates after the central bank lowered its forecasts for inflation and estimated it will reach its 2% target in 2025. Meanwhile, ECB Governing Council member Klaas Knot penciled in June for a first-rate cut and expects three rate cuts this year. ECB policymaker Yannis Stournaras stated the rate cuts as soon as July, with two more by the end of the year.

On the other hand, analysts have different opinions on whether the BoJ will raise rates in March or in April. In the case of a rate hike, the central bank is projected to raise the interest rates by 20 basis points (bps) to 0.1% from -0.1%. There is a likelihood that the BoJ will wait until April to raise the interest rate, with investors pricing in 39% odds that the BoJ will hike on Tuesday. Any dovish remarks from the Japanese policymakers might weigh on the Japanese Yen (JPY) and create a tailwind for the EUR/JPY cross. 

Looking ahead, market participants will focus on the Eurozone Harmonized Index of Consumer Prices (HICP) and Trade Balance , due on Monday. The highlight on Tuesday will be the BoJ interest rate decision. Also, the ZEW Survey from Germany and the Eurozone will be due later on Tuesday. Traders will take cues from the data and find trading opportunities around the EUR/JPY cross. 

• The pair met strong resistance at the 20-day SMA, which in case of conquering it, will confirm a bullish bias.
• The daily chart indicators suggest a strengthening upward momentum with the RSI jumping above 50.
• The hourly RSI hovers in the overbought territory, a potential sign of short-term buyer exhaustion.

In Friday's session, EUR/JPY trades with gains at 162.27, marking a 0.54% rise in attempting to conquer the 20-day Simple Moving Average (SMA). The bulls seemingly hold a strong grip, as the buying momentum appears to intensify. Yet, the sellers might come into action as the indicators flash overbought signs on the hourly signs.

Based on the indicators of the daily chart for the EUR/JPY pair, the Relative Strength Index (RSI) has moved into positive territory, suggesting a stronger upward momentum. Meanwhile, the downturn of the Moving Average Convergence Divergence (MACD) histogram prints shortening red bars, arguing in favor of a stronger bullish grip.

EUR/JPY daily chart

Turning to the hourly chart, the RSI seems to be hovering in the overbought territory. Despite a strong upward trend, this indicates potential exhaustion from the buyers. Similarly, the MACD's decreasing green bars might be signaling a shift in the tide, turning favor towards sellers for the short-term period.

EUR/JPY hourly chart

Given that the pair remains above the 100- and 200-day SMAs, yet below the 20-day SMA, it gives mixed signals regarding the broader market control. Thus, an interplay of daily and hourly charts suggests an uphill battle with the bulls maintaining control in a larger context, albeit facing potential near-term pressures.

• EUR/JPY trades on a softer note around 161.15 in Friday’s early European session. 
• BoJ’s Ueda said that policymakers will discuss whether the outlook is favorable enough to phase out the massive monetary stimulus. 
• ECB’s Lane said March data showed progress on inflation, but ECB needs more time to decide when to ease policy.

The EUR/JPY cross attracts some sellers above the 161.00 support level during the early European trading hours on Friday. The cautious mood in the market provides some support to the Japanese Yen (JPY) against the Euro (EUR). However, the lower bets that the BoJ will abandon its negative rates soon might cap the upside of the cross. Market players await the Bank of Japan (BoJ) interest rate decision for fresh catalysts. The cross currently trades near 161.15, down 0.05% on the day. 

The uncertainty around the Bank of Japan's next policy decision is likely to weaken the JPY and create a headwind for the EUR/JPY cross. The BoJ Governor Kazuo Ueda said that policymakers will discuss whether the outlook is favorable enough to phase out the massive monetary stimulus. Meanwhile, the rising geopolitical tension in Europe might boost safe-haven flows and benefit the JPY. Western officials reported on Friday that Russia has moved tactical nuclear weapons from its borders into neighboring Belarus, several hundred miles closer to NATO territory. 

On the Euro front, the European Central Bank (ECB) chief economist Philip Lane stated that the central bank needs to take time to get a clearer picture of inflationary pressures in June. ECB President Christine Lagarde said during the press conference at its March meeting that the first-rate cuts are likely to take place in June rather than in April. 

Later on Friday, the February Consumer Price Index (CPI) from France and Italy is due. These events are unlikely to move the market as traders await the BoJ monetary policy meeting next week. The outcome of the BoJ rate decision could give a clear direction to the EUR/JPY cross in the near term. 

• Daily chart displays continued bearish momentum with RSI lingering below 50.
• Hourly indicators also show negative but weakened momentum.
• Bulls must retake the 20-day SMA to brighten the technical outlook.

In Thursday's session, the EUR/JPY pair is trading at 161.33, with a 0.20% loss. Indicators suggest that sellers are in command within the current market, driving a bearish but weakening momentum. Despite this, a broader bullish sentiment persists, underlining the pair's position above key Simple Moving Averages (SMAs). However, as long as the pair stands below the 20-day SMA for the short term, the outlook will be tilted to the downside.

On the daily chart, the Relative Strength Index (RSI)  fell below 50 into negative territory, towards at 48, pointing south. This indicates continued bearish momentum. The Moving Average Convergence Divergence (MACD) confirms this downward trend, as it displays red bars, but their decreasing nature hints that the momentum is slower.

EUR/JPY daily chart

On the hourly chart, a similar picture is seen. The RSI is currently at around 46 while the MACD histogram further corroborates the negative view with the presence of red bars.

EUR/JPY hourly chart

Despite the ongoing bearishness, the pair's position above its 100 and 200-day Simple Moving Averages suggests a positive overall trend on a broader scale. Therefore, while the market may experience short-term selling pressure, the longer-term outlook remains in favor of buyers. As the negative momentum seems to be waning, buyers might step in and move towards the 20-day SMA, which, in case of conquering it, would improve the pair's outlook.

• EUR/JPY holds positive ground for the third consecutive day near 161.85 on Thursday. 
• BoJ’s Ueda comments and risk-on mood weigh on the Japanese Yen against the Euro. 
• ECB’s Galhau said it will probably start cutting rates during the spring as a victory against inflation is in sight.

The EUR/JPY cross extends its upside below the 162.00 psychological barrier during the Asian trading hours on Thursday. The diminishing possibility of ending negative interest rates by the Bank of Japan (BoJ) exerts some selling pressure on the Japanese Yen. At press time, EUR/JPY is trading at 161.85, adding 0.05% on the day. 

Most analysts anticipate that the Bank of Japan (BoJ) will exit its negative rate policy next week as Japanese policymakers have more evidence of a wage hike after the annual spring negotiations between unions and the biggest companies in Japan this week. However, BoJ Governor Kazuo Ueda offered a slightly bleaker assessment than in January, saying the economy was recovering but also showing some signs of weakness. Furthermore, the risk-on mood environment and bullish sentiment around the global equity markets weigh on the Japanese Yen (JPY) against the Euro (EUR). 

The European Central Bank policymaker Francois Villeroy de Galhau said on Wednesday that the central bank will probably start cutting rates during the spring, between April and June as the "victory" against inflation is in sight. Meanwhile, ECB Governing Council member Peter Kazimir stated that the central bank shouldn’t cut interest rates before June as it needs additional data to ensure that inflation has been tamed. 

Earlier this month, ECB President Christine Lagarde remarked that the first rate cuts would take place at the June meeting rather than in April. These dovish comments from the ECB policymakers might cap the upside of the EUR and act as a headwind for the EUR/JPY cross. 

Moving on, traders will keep an eye on Spain’s Consumer Price Index (CPI) on Thursday, along with the ECB’s Elderson, Schnabel, and De Guindos speeches. The CPI inflation data from France and Italy will be released on Friday. Next week, market players will shift their attention to the BoJ interest rate decision. This event might trigger volatility in the market and give a clear direction to the EUR/JPY cross. 

• RSI on the daily chart for EUR/JPY reveals growing buying momentum, while contrasting MACD may suggest a steady bearish sentiment.
• The hourly RSI near overbought condition may signal that the pair may consolidate in the next hours.

The EUR/JPY pair is seen holding comfortable grounds at 161.83, marking a gain of 0.31%. On the shorter timeframes indicators gained significant ground and are near overbought territory which could mean the pair might consolidate in the next hours. Overall, the outlook remains bullish but the buyers must regain the 20-day Simple Moving Average (SMA) to make the short-term outlook more positive.

On the daily chart for EUR/JPY, the Relative Strength Index (RSI) is showing a positive trend. It has increased from negative to positive territory, signaling stronger buying momentum. However, the decreasing red bars of the Moving Average Convergence Divergence (MACD) imply bearish but less intense momentum.

EUR/JPY daily chart

The EUR/JPY hourly chart shows that the RSI rose to around 60, matching the daily positive momentum. Nonetheless, despite the strong buying pressure, the MACD presents flat green bars, suggesting a stagnant bullish momentum. This reflects a potential consolidation phase for the remainder of the session.

EUR/JPY hourly chart'

In the broader scale technical outlook, despite the bears pulling the EUR/JPY pair below the 20-day Simple Moving Averages (SMA), it remains above both the 100 and 200-day SMAs. This indicates that the bulls continue to control the market on larger time frames. The buy signals indicated by the RSI on both the daily and hourly charts are slightly overshadowed by the stagnating MACD on the hourly chart as buyers might start to take profits in the coming hours.

• EUR/JPY trades on a softer note near 161.30 amid the growing possibility of a March rate hike from the BoJ. 
• The cross maintains the bearish tone below the key EMA; RSI momentum indicator lies below the 50-midline. 
• The first upside barrier is seen at 161.65; the initial support level for the cross is located at 160.87. 

The EUR/JPY cross edges lower to 161.30 during the early European session on Wednesday. Most companies have agreed to offer sizeable pay increases at annual talks with trade unions, paving the way for the Bank of Japan (BoJ) to end negative interest rates as early as next week. This, in turn, lifts the Japanese Yen (JPY) and creates a headwind for the EUR/JPY cross. 

According to the four-hour chart, EUR/JPY keeps the bearish vibe unchanged as the cross holds below the 50- and 100-period Exponential Moving Averages (EMA). Furthermore, the Relative Strength Index (RSI), which lies below the 50-midline, supports the sellers for the time being. 

The key upside barrier for EUR/JPY will emerge at the confluence of the upper boundary of the Bollinger Band and the 50-period EMA at 161.65. Further north, the next hurdle is seen at the 100-period EMA at 161.85. Any follow-through buying above this level will see a rally to a high of March 8 at 162.17, followed by a high of March 6 at 162.95. 

On the other hand, the initial support level for the cross is located at a low of March 12 at 160.87. The next contention level is seen at the lower limit of the Bollinger Band 160.25. The additional downside filter to watch is a psychological round mark at 160.00. 

EUR/JPY four-hour chart

• The daily chart indicators suggest that overall selling pressure remains steady despite daily gains.
• On the hourly chart, indicators send mixed signals.
• The pair defending the 100-day SMA contributes to the overall outlook remaining bullish.

In Tuesday's trading session, EUR/JPY is trading roughly around 161.27, with a daily gain of 0.44%. Despite recent selling pressures, the pair maintains a position above critical support levels, hinting at an overall bullish power. In the short term, the sellers seem to have a stronger grip, as the pair struggles below the 20-day Simple Moving Average (SMA).

On the daily chart, the EUR/JPY's Relative Strength Index (RSI) is currently in negative territory. This implies that the selling pressure has been dominating the market in recent sessions. This trend is underscored by the red bars observed in the Moving Average Convergence Divergence (MACD), indicating negative but weakening momentum. Despite this, the pair is still above its key 100 and 200-day SMAs, pointing to broader bullish control.

EUR/JPY Daily Chart

Switching focus to the hourly chart, the RSI has been moving within positive territory. On the other hand, the MACD is printing decreasing green bars, which suggests a slightly tapering bullish momentum. This aligns with the slope of the RSI which seems to have flattened during the American session.

EUR/JPY Hourly Chart

• EUR/JPY snaps its losing streak after dovish remarks from Japanese minister.
• Japan's Finance Minister Suzuki indicated that the present moment is not conducive to tightening monetary policy.
• The Euro strengthens in response to the ECB's commitment to uphold strict policy measures aimed at achieving its inflation target.

EUR/JPY edges higher to 161.40 during the Asian trading hours on Tuesday, halting its five-day losing streak. The Japanese Yen (JPY) encounters downward pressure following remarks made by Japan's Finance Minister Shunichi Suzuki, who suggested that now is not the appropriate time for the Bank of Japan (BoJ) to tighten monetary policy. This dynamic provides support for the EUR/JPY cross.

Furthermore, Bank of Japan (BoJ) Governor Kazuo Ueda stated in his parliamentary speech on Tuesday, "When the achievement of a 2% inflation target is within reach in a stable and sustainable manner, we will consider exiting from negative interest rates. If inflation accelerates and necessitates monetary tightening, we may raise interest rates without reducing the BoJ's bond holdings."

On the other side, Christine Lagarde, the President of the European Central Bank (ECB), has adopted a prudent stance, stressing the importance of gathering further evidence before considering any adjustments to interest rates. The ECB has opted to retain its current monetary policy, reaffirming its commitment to steering inflation back to its desired levels.

The ECB has clearly stated its intention to maintain appropriately stringent policy measures for as long as necessary to achieve its inflation target. The positive sentiment surrounding the ECB could potentially strengthen the Euro, thereby providing support for the EUR/JPY cross. Investors are expected to closely monitor the release of Germany's Consumer Price Index (CPI) data scheduled for Tuesday.

• Daily chart analysis reveals heightened selling pressure with the RSI and MACD deep in the negative zone.
• The hourly chart saw a short-lived recovery in the indicators.
• Although the pair has experienced recent declines, its positioning above the key SMAs signals an ongoing bullish outlook.

In Monday's session, the EUR/JPY pair is trading at 160.57, showing a daily decrease of 0.19%. Despite ongoing fluctuations, it is currently observed that the sellers are moderating the buyers' strength. A short-lived recovery seen in the shorter time frames seems to be waning.

On the daily chart, the Relative Strength Index (RSI) measures around 41, indicating strong selling pressure. A downtrend was noted from being in positive territory a week ago at a peak of approximately 65 as the seller seized control. Concurrently, the Moving Average Convergence Divergence (MACD) histogram is witnessing rising red bars, interpreting a growth in negative momentum.

EUR/JPY daily chart

Moving to the hourly chart of EUR/JPY, the RSI is almost equivalent to the daily chart showing an RSI of around 40 after hitting oversold conditions earlier in the session. The MACD histogram depicts decreasing green bars, indicating that the built buying momentum is declining.

EUR/JPY hourly chart

In the larger picture, the EUR/JPY pair, despite recently losing ground, remains above the 100 and 200-day Simple Moving Averages (SMAs). This suggests that on larger time frames, bullish sentiment persists.

• EUR/JPY retreats, influenced by potential changes in BoJ's monetary policy and wage negotiation outcomes.
• Japan's GDP outperforms expectations, stoking anticipations for a BoJ rate adjustment in the near future.
• ECB's hawkish tone tempers immediate easing expectations, with policy shifts eyed for June amidst inflation concerns.

The Euro registered losses against the Japanese Yen in the morning of the North American session. It was down 0.13% and traded at 160.55 after hitting a daily high below the 161.00 mark. Rumors that the Bank of Japan (BoJ) could end negative rates sponsored a neg-down in the EUR/JPY pair.

Euro dips against Yen on growing speculations over BoJ rate hikes

According to sources cited by Reuters, some BoJ policymakers are considering ending the negative rate. Officials are eyeing wage negotiations between big companies and unions on March 13. A significant increase in salaries could increase the odds of a rate hike by the BoJ as soon as the March 18-19 meeting.

Data-wise, the Gross Domestic Product (GDP) in Japan for the last quarter of 2023 indicated the economy dodged a recession, coming at 0.1% QoQ, exceeding estimates and the prior’s reading at  -0.1%. Annually based, GDP was 0.4%, less than expected, above the previous estimate of -0.4%.

In the Euro area (EU), the European Central Bank (ECB) held rates unchanged at last Thursday's meeting, though ECB President Christine Lagarde opened the door to easing policy in June. Initially, the EUR/JPY paired its losses, but it resumed its downtrend last Friday and carried onto Monday’s session.

During the European session, ECB’s Kazimir delivered hawkish remarks, pushing the first rate cut until June. He acknowledged that risks of inflation are “alive and kicking.” He added that discussions should already start and favor a “smooth and steady” cycle of policy easing.

EUR/JPY Price Analysis: Technical outlook

Since last week, the EUR/JPY has extended its losses to more than 1.70%, breaking key support levels like the Tenkan and Kijun Sen, and the psychological 161.00 level. If sellers remain in charge, the pair could aim towards the top of the Ichimoku Cloud (Kumo) at 158.90/159.00, though firstly a break of the 160.00 mark is a must. On the other hand, if buyers move in and push the exchange rate above 161.00, look for a test of the Kijun-Sen at 161.31.

• EUR/JPY could gain ground on growing speculation of BoJ lifting negative rates.
• Japan’s GDP QoQ increased by 0.1% in the fourth quarter of 2023, against the previous decline of 0.1%.
• Traders will observe ECB Lagarde’s remarks during the Eurogroup Meeting on Monday.

EUR/JPY recovers its intraday losses as the Japanese Yen (JPY) strengthened following Japan’s Gross Domestic Product (GDP) data showing Japan's economy returned to growth in the last quarter of 2023, thus turning away from a technical recession. The EUR/JPY cross attempts to rebound from weekly lows, trading around 160.60 during the early European trading hours on Monday.

Japan’s GDP quarter-on-quarter expanded by 0.1% in the fourth quarter of 2023, reversing the previous decline of 0.1% but falling short of the expected 0.3% growth. Meanwhile, the GDP Annualized figure showed a reading of 0.4% growth, below the market expectation of 1.1% and the previous decline of 0.4%. Consequently, Japan’s 2-year yield surged towards 0.20%, marking the highest level since 2011. Additionally, the 10-year government bond yield rose to near 0.75%.

These GDP figures have strengthened speculations that the Bank of Japan (BoJ) could commence raising interest rates soon. BoJ policymakers are reportedly inclined towards the notion of ending negative interest rates this month, driven by expectations of substantial pay hikes in the year's annual wage negotiations.

Last week, BoJ Governor Kazuo Ueda stated that it is "fully possible to seek an exit from stimulus while striving to achieve the 2% inflation target." Additionally, BoJ board member Junko Nakagawa recently commented that “prospects for the economy to achieve a positive cycle of inflation and wages are in sight."

On the other side, the European Central Bank (ECB) maintained borrowing costs at record levels last week, in line with expectations. ECB President Christine Lagarde adopted a cautious stance, stressing the need for further evidence before considering rate cuts. Market participants will closely watch Lagarde's remarks during the Eurogroup Meeting scheduled for Monday. Additionally, Consumer Price Index (CPI) data from Germany on Tuesday will likely attract attention from investors.