CFD Trading Rate Euro vs Japanese Yen (EURJPY)

• EUR/JPY attracts some buyers to around 164.30 in Wednesday’s early European session, adding 0.43% on the day. 
• The cross resumes the upside above the 100-period EMA with the bullish RSI indicator. 
• The first upside barrier is seen at 164.55; the initial support level is located at 164.17.

The EUR/JPY cross resumes the upside to near 164.30 during the early European session on Wednesday. The lack of clear guidance on the next rate hike timing by the Bank of Japan (BoJ) weighs on the Japanese Yen (JPY) and acts as a tailwind for the cross. However, the escalating tensions of the Russia-Ukraine war could boost the safe-haven flows, benefiting the JPY. 

According to the 4-hour chart, EUR/JPY resumes the bullish trends as the cross climbs above the key 100-period Exponential Moving Average (EMA). Furthermore, the 14-day Relative Strength Index (RSI) is located above the midline near 57.30, indicating that further upside looks favorable in the near term. 

The upper boundary of the descending trend channel of 164.55 acts as an immediate resistance level for the cross. A sustained move above this level could see a rally to the 165.00-165.05 zone, representing the psychological level and the high of November 15. The next hurdle to watch is 166.10, the high of November 6. 

On the flip side, the initial support level for EUR/JPY emerges near the 100-period EMA at 164.17. A breach of the mentioned level could pave the way to 163.21, the low of November 8. The additional downside filter to watch is 162.35, the low of November 16. Extended losses could expose 162.15, the lower limit of the trend channel.  

EUR/JPY 4-hour chart

• EUR/JPY declined by 0.47% to 163.10 in Tuesday's session.
• Price rallied above 163.00 after buyers stepped in following a decline to 161.50, but indicators remain deeply negative.
• The pair might continue shedding ground as long as it remains below the 20-day SMA.

The EUR/JPY declined by 0.47% to 163.10 in Tuesday's session, dragged lower by the strength of the Japanese yen. However, after the pair fell to a low of 161.50, buyers stepped in and pushed it back above 163.00. Nevertheless, if the pair can sustain above the 20-day Simple Moving Average (SMA), it could potentially reverse its recent losses and resume its uptrend.

Technical indicators for the EUR/JPY currency pair point towards a negative outlook. The oscillator Relative Strength Index (RSI) has dipped to 46, implying growing selling pressure. Furthermore, the Moving Average Convergence Divergence (MACD) is considerably bearish, with its histogram trending downwards. Taken together, these indicators suggest a bearish sentiment for the EUR/JPY pair, potentially leading to continued declines.

The EUR/JPY pair slightly recovered on Tuesday, but technical indicators point to a negative outlook. Both the RSI and MACD are deeply negative, indicating further declines are likely as long as the pair remains below the 20-day SMA. Buyers intervened, lifting it above 163.00, but they may not be able to sustain this level as technical indicators suggest the pair is set to resume its downtrend and decline further in the near term.

EUR/JPY daily chart

• EUR/JPY struggles to capitalize on Monday’s recovery from a nearly one-month low.
• Intervention fears and geopolitical risks revive demand for the JPY and exert pressure.
• The BoJ rate-hike uncertainty cap gains for the JPY and helps limit losses for the cross.

The EUR/JPY cross meets with a fresh supply during the Asian session on Tuesday and reverses a part of the previous day's recovery move from the 50-day Simple Moving Average (SMA), around the 162.25 region, or a nearly one-month low. The intraday slide is sponsored by the emergence of fresh buying around the Japanese Yen (JPY) and drags spot prices back closer to the 163.00 mark in the last hour, though lacks follow-through.

Geopolitical tensions escalated after the Biden administration approved Ukraine’s use of long-range US weapons deeper inside Russia, which has deployed North Korean troops to reinforce its war. This, along with speculations that Japanese authorities will intervene in the FX market to prop up the domestic currency, turn out to be key factors undermining the safe-haven JPY and exerting some downward pressure on the EUR/JPY cross.

The shared currency, on the other hand, struggles to lure buyers amid bets for more aggressive rate cuts by the European Central Bank (ECB) on the black of a bleak Eurozone economic outlook. Adding to this, US President-elect Donald Trump's protectionist policies pose additional threats to the Eurozone economy. This might continue to weigh on the Euro and suggests that the path of least resistance for the EUR/JPY cross is to the downside. 

That said,  the uncertainty over the timing of another interest rate hike by the Bank of Japan (BoJ) could act as a headwind for the JPY amid a generally positive risk tone. This, in turn, could assist the EUR/JPY cross to attract some dip-buyers and help limit the downside near the 50-day SMA. The said support should act as a key pivotal point, which if broken should pave the way for the resumption of the recent corrective slide from a multi-year top.

• EUR/JPY gains momentum to near 163.00 in Monday’s early Asian session, up 33% on the day. 
• The lack of clear guidance on the next BoJ rate hike timing weighs on the JPY. 
• ECB’s Cipollone said the central bank should cut rates further to support recovery.

The EUR/JPY cross attracts some buyers to around 163.00 during the early European session on Monday. The Japanese Yen (JPY) weakens against the Euro (EUR) amid the uncertainty over the Bank of Japan's (BoJ) rate-hike plans. The European Central Bank (ECB) Vice President Luis de Guindos and Phillip Lane are scheduled to speak on Monday. 

The BoJ Kazuo Ueda said this Monday that the timing for when the central bank adjusts the degree of our monetary support will depend on the economic, price, and financial outlook. Ueda further stated that the Japanese central bank wouldn't necessarily wait for external risks to completely fade before hiking again. Nonetheless, he offered few clues on whether the BoJ would raise rates in December. The lack of clear guidance on the next rate hike timing exerts some selling pressure on the JPY and creates a tailwind for EUR/JPY. 

The verbal intervention from the Japanese authorities could provide some support to the JPY and cap the upside for the cross. Japan's Finance Minister Katsunobu Kato said on Friday that the Japanese government will scrutinize the Foreign exchange market with very high vigilance and take appropriate action against excessive moves.

On the Euro front, the European Central Bank (ECB) board member Piero Cipollone noted on Friday that the ECB should cut interest rates further to support a nascent economic recovery in the Eurozone and also in the face of potential new trade tariffs in the US. However, the pace and extent of rate cuts will depend on the incoming data. The dovish comment from the ECB policymakers could undermine the Euro in the near term. 

• EUR/JPY sank on Friday to near 163.10 after a 0.72% decline on the day.
• Pair's price action plunged to 163.00 after facing rejection at the 164.00 SMA.
• The MACD and RSI technical indicators signaled increasing selling pressure, contributing to the pair's downtrend.

The EUR/JPY currency pair witnessed a significant decline on Friday, losing 0.72% to reach a low of 163.10. Prior to this drop, the pair faced resistance at the 164.00 Simple Moving Average (SMA), which contributed to its downward movement.

The technical indicators employed in this analysis, namely the Moving Average Convergence Divergence (MACD) and Relative Strength Index (RSI), further underscore the bearish sentiment surrounding the EUR/JPY pair. The MACD histogram's red coloration and increasing size point to rising selling pressure, corroborated by the MACD line's position below the signal line. The RSI, with a value of 43, resides in negative territory and exhibits a sharply declining slope, indicating an increase in selling pressure.

The pair's probable continuation of its downward trajectory is suggested by its trading below the 163.50 resistance level. Furthermore, support levels at 163.00, 162.50, and 162.00 deserve attention, while resistance levels at 164.00, 164.50, and 165.00 warrant monitoring.

EUR/JPY daily chart

• EUR/JPY is approaching levels where it threatens to reverse the medium-term trend. 
• Further downside could see the pair fall to the 50-day SMA. 

EUR/JPY is threatening to reverse its medium-term uptrend and begin a new downtrend. This is important since according to technical analysis theory “the trend is your friend” so if the medium-term trend reverses the odds will favor more downside to come.

EUR/JPY Daily Chart 

A break below the 163.21 (November 8 low) would probably confirm a bearish reversal of the trend. The next target to the downside is likely to be support from the 50-day Simple Moving Average (SMA) at 162.17. 

The Relative Strength Index (RSI) momentum indicator is plateauing around the 49 mark but looks vulnerable to extending another leg lower. This further reinforces the bearish trend reversal thesis. 

• EUR/JPY edges higher to near 164.40 in Thursday’s early European session. 
• Further consolidation cannot be ruled out amid the neutral RSI indicator. 
• The key resistance level emerges at the 164.95-165.00 region; the initial support level is located at 163.64.

The EUR/JPY cross gains traction to around 164.40 during the early European trading hours on Thursday. A lack of clear direction regarding the timing of a rate hike from the Bank of Japan (BoJ) weighs on the Japanese Yen (JPY) against the Euro (EUR). 

Traders brace for the flash Eurozone Gross Domestic Product (GDP) number for the third quarter (Q3), which is due later on Thursday, along with the speech from the European Central Bank (ECB) President Christine Lagarde.

Technically,  EUR/JPY hovers around the key 100-period Exponential Moving Averages (EMA) within the descending trend channel on the 4-hour chart. The cross could resume the upside if it can break above the 100-period EMA. However, further consolidation cannot be ruled out as the Relative Strength Index (RSI) stands near the midline, suggesting the neutral momentum of the cross.

The crucial resistance level for EUR/JPY emerges in the 164.95-165.00 zone, representing the upper boundary of the descending trend channel and the psychological level. Any follow-through buying could see a rally to 166.00, the high of November 7. 

On the downside, the low of November 13 at 163.64 acts as an initial support for the cross. Decisive trading below the mentioned level could expose 162.90, the lower limit of the trend channel. Extended losses could pave the way to 162.00, the low of October 21 and the round number. 

EUR/JPY 4-hour chart

• EUR/JPY traded neutral in Wednesday's session and stands around above 164.00.
• The main SMAs converged toward the 164.00-165.00 area, forming a resistance zone that has been hard for the bulls to break.
• The MACD and RSI were giving conflicting signals hence suggesting that the outlook was mixed.

The EUR/JPY was seen around 164.00 in Wednesday's session, with indicators sending mix signals. The 164.00-165.00 area remains crucial for short-term direction.

The technical outlook for the EUR/JPY is mixed. The Relative Strength Index (RSI) is in positive territory at 51, but its flat slope suggests that buying pressure is flat. The Moving Average Convergence Divergence (MACD) is red and rising, suggesting that selling pressure is rising. The overall outlook is mixed, with the RSI and MACD giving conflicting signals.

The 164.00-165.00 range serves as a crucial resistance zone, while the RSI's flat buying pressure and the MACD's growing selling pressure create an uncertain momentum. Traders should closely monitor whether bulls can break through this resistance area to confirm a bullish trend, or if bears push the pair lower towards key support levels at 163.00 and 162.00.

EUR/JPY daily chart

• 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 builds on the overnight bounce from the vicinity of the 163.25-163.20 horizontal support, or the weekly low and gains some follow-through traction on Wednesday. This marks the third day of a positive move and lifts spot prices to the top end of the weekly range, around the 164.60-164.65 region during the first half of the European session.

The uncertainty over the Bank of Japan's (BoJ) rate-hike plans is seen undermining the Japanese Yen (JPY) and turning out to be a key factor acting as a tailwind for the EUR/JPY cross. That said, speculations that Japanese authorities will intervene in the FX market to prop up the domestic currency, along with a weaker risk tone, should limit losses for the safe-haven JPY. Furthermore, a political crisis in Germany – the Eurozone's largest economy – continues to weigh on the shared currency and should cap gains for the currency pair. 

Moreover, neutral oscillators on the daily chart warrant some caution for bulls and suggest that any subsequent move up is more likely to face stiff resistance near the 165.00 psychological mark, or the 200-day Simple Moving Average (SMA). A sustained move beyond should lift the EUR/JPY cross towards the 165.45 hurdle en route to the 165.90-166.00 supply zone. This is followed by a multi-year peak, around the 166.65-166.70 area touched in October, which if cleared should pave the way for the resumption of a two-month-old uptrend. 

On the flip side, the 164.00 round figure now seems to protect the immediate downside ahead of the 163.25-163.20 horizontal support. A convincing break below the latter might prompt some technical selling and drag the EUR/JPY cross below the 163.00 mark, towards testing the next relevant support near the 162.50-162.45 region. The corrective decline could extend further towards the 50-day SMA, currently pegged near the 162.00-161.95 zone.

EUR/JPY daily chart

• EUR/JPY gains momentum to near 164.35 in Wednesday’s Asian session.
• The Japanese Yen softens as the BoJ undecided on a rate hike.
• ECB’s Kazaks said the central bank should go on cutting interest rates gradually.

The EUR/JPY cross edges higher to around 164.35 on Wednesday during the early Asian trading hours. The Japanese Yen (JPY) weakens against the Euro (EUR) amid the Bank of Japan (BoJ) rate hike uncertainty. The flash Eurozone Gross Domestic Product (GDP) data for the third quarter (Q3) will be the highlight on Thursday. 

The BoJ summary of opinions suggested a lack of clear direction regarding the timing of a rate hike as policymakers were split on whether to raise interest rates. Additionally, the political uncertainty in Japan has raised doubts over the Japanese central bank’s ability to tighten its monetary policy further. This, in turn, weighs on the JPY and acts as a tailwind for EUR/JPY. 

On the Euro front, European Central Bank (ECB) Governing Council member Martins Kazaks said on Tuesday that the central bank should go on cutting interest rates gradually. Meanwhile, ECB policymaker Olli Rehn stated that further easing next month looks likely as disinflation in the euro area is “well on track” and the growth outlook “seems to be weakening. However, officials should remain cautious and move step by step. 

The markets have fully priced another 25 basis points (bps) rate cut from the ECB in its last meeting of the year in December. The ECB’s deposit facility is currently at 3.25%.

• EUR/JPY remained tepid after the German Harmonized Index of Consumer Prices data released on Tuesday.
• German HICP increased by 2.4% YoY in October, up from the September’s 1.8% reading.
• Japan's Finance Minister Katsunobu Kato cautioned to take appropriate action to manage fluctuations in the FX market.

EUR/JPY has offered its recent gains from the previous session, falling to near 163.50 during the European trading hours on Tuesday. The Euro faces downward pressure as expectations grow for the European Central Bank (ECB) to adopt aggressive rate cuts. The ECB is expected to lower rates by 25 basis points in December, with market projections indicating a potential decline to 2% by June.

On the data front, Germany’s Consumer Price Index (CPI) rose to 2.0% year-over-year in October, up from September’s three-and-a-half-year low of 1.6%, marking the highest inflation rate in three months. Additionally, the Harmonized Index of Consumer Prices (HICP) increased by 2.4% YoY, up from the previous 1.8% reading, and climbed 0.4% month-over-month after a 0.1% decline in September.

On the political side, German Chancellor Olaf Scholz has expressed a willingness to move the parliamentary confidence vote forward by several weeks, possibly scheduling it before Christmas. This shift could pave the way for an early election.

The Japanese Yen (JPY) found support after new verbal interventions from Japanese officials. Finance Minister Katsunobu Kato warned that authorities are prepared to take “appropriate action” to manage sharp fluctuations in the foreign exchange market.

However, the JPY’s upward momentum is capped by uncertainty surrounding the Bank of Japan’s (BoJ) rate-hike plans. Japan’s fragile minority government is likely to complicate any moves toward tightening monetary policy. Additionally, the BoJ’s Summary of Opinions from its October meeting indicated a division among policymakers regarding further rate hikes.

• EUR/JPY strengthened as the BoJ's Summary of Opinions highlighted divisions among policymakers over the timing of future interest rate hikes.
• Japanese Prime Minister Shigeru Ishiba faces a parliamentary leadership vote today, following the loss of ruling LDP lower house majority.
• Deutsche Bank analysts have warned that higher US tariffs could negatively affect the Eurozone’s export sector.

EUR/JPY rises to near 164.50 during the Asian trading session on Monday, driven by a weakening Japanese Yen (JPY). This movement follows the release of the Bank of Japan's (BoJ) October Summary of Opinions, which highlighted divisions among policymakers regarding the timing of future interest rate hikes.

Some BoJ members raised concerns about global economic uncertainties and the increasing market volatility, particularly in relation to the JPY's depreciation. Nevertheless, the central bank has indicated that it may raise its benchmark policy rate to 1% by the latter half of the 2025 fiscal year.

Meanwhile, Japanese Prime Minister Shigeru Ishiba faces a parliamentary leadership vote today, after the ruling Liberal Democratic Party (LDP) lost its lower house majority, which it had held since 2012. Ishiba may now seek to form a new government with support from minor parties, according to The Associated Press.

In Germany, Chancellor Olaf Scholz appointed a new finance minister following the dismissal of the previous one, a move that effectively dissolves the ruling coalition. This decision has sparked calls from opposition parties and business leaders for new elections to restore stability amid the growing political uncertainty.

Analysts at Deutsche Bank have warned that higher tariffs from the US could put pressure on the Eurozone’s export sector, potentially affecting economic growth and the Euro. They highlighted the high level of uncertainty surrounding various factors, including the precise impact of the US tariffs, the timing of their implementation, and how Europe will respond.

• EUR/JPY drifts lower for the second successive day and slides back below the 200-day SMA.
• Intervention fears offer some support to the JPY and exert downward pressure on the cross. 
• Bets for less aggressive ECB rate cuts could limit losses for the shared currency and spot prices.

The EUR/JPY cross remains under some selling pressure for the second successive day and drops to a two-week low, around mid-164.00s during the Asian session on Friday. The downfall is sponsored by a combination of factors and drags spot prices back below a technically significant 200-day Simple Moving Average (SMA).

The Japanese Yen (JPY) continues to draw support from speculations about a possible government intervention to prop up the domestic currency, which, in turn, is seen weighing on the EUR/JPY cross. In fact, Japan's Chief Cabinet Secretary, Yoshimasa Hayashi reiterated earlier this week that the government intended to closely watch moves in the FX market with a higher sense of urgency. Separately, Japan’s Vice Finance Minister for International Affairs and top FX official Atsushi Mimura said that the government is ready to take appropriate actions against excessive FX moves if necessary. 

Adding to this, Japan’s Finance Minister Katsunobu Kato said this Friday that the government will closely monitor the impact of President-elect Donald Trump's policies on the domestic economy. Furthermore, quarterly data from the Ministry of Finance (MOF) showed that Japan spent ¥5.53 trillion on currency intervention made during the period from June 27 through July 29. Meanwhile, a modest US Dollar (USD) strength prompts some selling around the shared currency, which, in turn, is seen contributing to the offered tone surrounding the EUR/JPY cross and the intraday slide. 

That said, a generally positive risk tone, along with doubts over the Bank of Japan's ability to tighten monetary policy further, could cap gains for the safe-haven JPY and limit losses for the currency pair. Donald Trump’s victory in the US presidential election fueled optimism about stronger economic growth. Adding to this, hopes for additional stimulus from China continues to boost investors' confidence and remain supportive of the upbeat mood. Investors, meanwhile, seem convinced that Japan's political landscape could make it difficult for the BoJ to hike interest rates this year.

Furthermore, data released on Thursday showed Japan’s real wages and household spending declined for the second straight month in September. This could dampen the inflation outlook and delay the BoJ's rate-hike plans. Adding to this, bets for a less dovish European Central Bank (ECB) might hold back traders from placing aggressive bearish bets around the Euro and offer some support to the EUR/JPY cross. This makes it prudent to wait for some follow-through selling before confirming that spot prices have topped out in the near term and positioning for deeper losses.

• EUR/JPY is unfurling a consolidation phase within an uptrend. Eventually it is expected to break higher. 
• An open gap just below price presents a short-term bearish risk, however, and a deeper pullback might evolve first. 

EUR/JPY is still unwinding a consolidation phase within a short and medium-term uptrend. Given the technical analysis maxim that “the trend is your friend”, however, the odds still favor an eventual continuation higher once this phase ends.

EUR/JPY 4-hour Chart 

A break above 166.69 (October 31 high) would probably confirm such a continuation higher. Resistance at 167.96 (July 30 swing high) could provide an initial target and act as a barrier to further upside. 

The minimum target for the breakout from the range, however, lies higher, at 169.68, the 61.8% Fibonacci extrapolation of the height of the range to the upside. 

That said, there is a risk of a deeper pullback first, due to the open gap which lies just below price between 164.90 and 164.45 (red-shaded rectangle on chart). gaps have a tendency to be filled, according to technical analysis theory. If so, EUR/JPY may weaken initially and fall to the bottom of the open gap at 164.45, before perhaps recovering and resuming its dominant uptrend. 

The Moving Average Convergence Divergence (MACD) momentum indicator has been falling during the unwiding of the consolidation phase and this decline in momentum without a corresponding fall in price is a sign of underlying weakness. It is another mild indication of the risk of possible near-term weakness materializing. 

• EUR/JPY meets with some supply on Thursday as JPY benefits from intervention fears.
• The BoJ rate hike uncertainty and the risk-on mood cap gains for the safe-haven JPY.
• Bets for less aggressive ECB rate cuts lend some support to the Euro and the cross.

The EUR/JPY cross struggles to capitalize on the previous day's goodish bounce from levels just below the 165.00 psychological mark and attracts fresh sellers on Thursday. Spot prices remain depressed through the first half of the European session and currently trade around the 165.70-165.65 area, though lack follow-through and remain confined in a familiar range held over the past week or so. 

Wednesday's surge in the USD/JPY pair, triggered by Donald Trump's victory in the US election, prompted verbal intervention by Japanese authorities. This leads to some unwinding of the bearish positions around the Japanese Yen (JPY), which, in turn, is seen exerting downward pressure on the EUR/JPY cross. That said, the uncertainty over the Bank of Japan's (BoJ) rate-hike plan keeps a lid on any meaningful appreciating move for the JPY.

Investors seem convinced that Japan's political landscape could make it difficult for the BoJ to tighten its monetary policy further. Moreover, government data released this Thursday showed that Japan's inflation-adjusted wages fell for the second straight month in September, raising doubts about how soon the BoJ could raise rates again. This, along with the risk-on mood, caps the upside for the safe-haven JPY and offers support to the EUR/JPY cross. 

The shared currency, on the other hand, draws support from bets for a less dovish European Central Bank (ECB). In fact, data released last week showed that inflation in the Eurozone rose to 2% in October. This, along with the better-than-expected GDP growth figures from the Eurozone's largest economies, suggests that the ECB will stick to a 25 basis points (bps) rate cut at the December meeting and helps limit the downside for the EUR/JPY cross.

Even from a technical perspective, the range-bound price action might still be categorized as a bullish consolidation phase on the back of the recent breakout above the very important 200-day Simple Moving Average (SMA). This, in turn, suggests that the path of least resistance for the EUR/JPY cross is to the upside. Hence, any subsequent decline might still be seen as a buying opportunity and is more likely to remain cushioned.

• EUR/JPY pulls back to the trendline for the recent rally from the September lows. 
• If it breaks higher it could kick-off an extension to a target in the 169s, MACD is bearish, however.

EUR/JPY continues its pullback to the trendline (dashed line on chart) for the September-October rally. 

The pair is in a short and medium-term uptrend which given the technical analysis maxim that “the trend is your friend” is favored to continue higher. 

EUR/JPY Daily Chart 

A break above 166.69 (October 31 high) would probably confirm such a continuation higher. 

Resistance at 167.96 (July 30 swing high) could provide an initial target and act as a barrier to further upside. 

The minimum target for the breakout from the range, however, lies higher, at 169.68, the 61.8% Fibonacci extrapolation of the height of the range to the upside (orange-shaded rectangle). 

The Moving Average Convergence Divergence (MACD) is threatening to cross below its signal line, however – a mildly bearish sign which could indicate further near-term weakness for the pair. 

There is also an open gap just below price which is only visible on the intraday charts at 164.90. Gaps have a habit of getting filled. If so, further weakness may be on the horizon, with price falling to the bottom of the open gap at 164.45. 

• EUR/JPY faces downward pressure following hawkish meeting minutes from BoJ.
• BoJ Meeting Minutes showed that members were largely in agreement on continuing to raise interest rates.
• Traders await PMI data for Germany and the Eurozone and speeches from ECB officials on Wednesday.

EUR/JPY maintains its position near 165.50 during the Asian trading hours on Wednesday as the Japanese Yen (JPY) gained support from hawkish minutes of the Bank of Japan's (BoJ) most recent meeting. The minutes showed that board members were largely in agreement on continuing to raise interest rates, as inflation and economic conditions align with the central bank’s objectives.

The Jibun Bank Japan Services Business Activity Index fell to 49.7 in October, down from 53.1 in September, signaling a decline in services activity. This marks the first contraction since June, although it was marginal, with companies reporting slower sales.

The positive Eurozone Gross Domestic Product (GDP) data led traders to scale back expectations for a larger-than-usual interest rate cut at the December policy meeting. However, markets still anticipate the European Central Bank (ECB) will reduce the Deposit Facility Rate by the usual 25 basis points (bps) in December.

PMI data for Germany and the Eurozone is set to be released on Wednesday, and traders will shift their focus to speeches from European Central Bank (ECB) President Christine Lagarde and Vice President Luis de Guindos later in the day.

Regarding the US presidential election, early exit poll results from Wisconsin indicate a lead for Republican candidate Donald Trump, with 56% of the vote compared to 42.5%, based on 7.5% of expected votes counted. In North Carolina, exit polls show a tight race between Trump and Kamala Harris, with 50% of the votes counted. In Michigan, with 12% of votes counted, Harris' lead has shrunk from 61% to 53%.

• EUR/JPY gains traction to around 165.75 in Tuesday’s early European session. 
• The lower bets of a larger ECB rate cut in December support the Euro. 
• Less dovish remarks from the BoJ, safe-haven flows are likely to cap the upside for the cross. 

The EUR/JPY cross attracts some buyers to near 165.75 during the early European session on Tuesday. The Euro (EUR) edges higher as the recent Eurozone economic data has diminished expectations for the European Central Bank (ECB) to cut larger interest rates in December.

The stronger-than-expected Eurozone Gross Domestic Product (GDP) data prompted traders to pare bets supporting a larger-than-usual interest rate cut in the December policy meeting. Money markets are currently pricing in a 34 basis points (bps) rate cut, down from a 42 bps reduction the previous day. 

The ECB Executive Board member Isabel Schnabel said last week that a “gradual” approach to monetary easing remains appropriate, while Bundesbank President Joachim Nagel said officials mustn’t rush further steps on rate cuts. Traders will take more cues from the Eurozone November inflation report, which might offer some hints about the pace and size of ECB interest rate reduction. 

The upside for the cross might be limited amid the uncertainty surrounding the US presidential election and the ongoing geopolitical tensions in the Middle East, which boost the safe-haven assets like the Japanese Yen (JPY). 

Additionally, less dovish remarks from BoJ Governor Kazuo Ueda could lift the JPY in the near term. BoJ’s Ueda said last week that Japan faces smaller risks from the US and global economies, hinting that the Japanese central bank is closer to an additional interest rate hike, possibly in the coming months.

• EUR/JPY corrects back to the trendline for its bullish advance.
• Given the short and medium-term trends are bullish, the odds favor more upside if certain conditions are met. 

EUR/JPY is pulling back within its short and medium-term uptrend. The pair has fallen to the level of the trendline (dashed line) for the rally since the September lows. Given the trend is bullish and technical analysis theory says “the trend is your friend” the odds favor more upside once the correction completes. 

EUR/JPY Daily Chart 

A break above 166.69 (October 31 high) would probably confirm a continuation higher. 

Resistance at 167.96 (July 30 swing high) could act as a barrier to further upside. The minimum target for the breakout from the range lies at 169.68, the 61.8% Fibonacci extrapolation of the height of the range to the upside (orange-shaded rectangle).