CFD Trading Rate Euro vs Japanese Yen (EURJPY)

• 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). 

• EUR/JPY is correcting within a bullish advance.
• Given the short and medium-term trends are bullish more upside it expected providing certain conditions are met. 

EUR/JPY is pulling back after rising above the ceiling of its multi-month range and breaking above the cluster of major moving averages lying just above.  

EUR/JPY Daily Chart 

The short and medium-term trends are bullish suggesting the odds favor more upside to come and a resumption of the uptrend. 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. 

The Relative Strength Index (RSI) momentum indicator is not yet in the overbought zone (above 70) suggesting the pair has room to go higher.

• EUR/JPY retrieves half of its intraday losses as BoJ Ueda didn’t provide meaningful cues about more rate hikes in December.
• The BoJ left its key borrowing rates steady at 0.25% in its October policy meeting.
• High GDP growth and hot inflation in the Eurozone have strengthened the Euro.

The EUR/JPY pair recovers some of its intraday losses in the European trading hours on Thursday. The cross faced sharp selling pressure in the Asian session after the Bank of Japan’s (BoJ) interest rate decision in which it left interest rates unchanged at 0.25%, as expected.

The asset has bounced back after BoJ Governor Kazu Ueda’s commentary in an early European session in which he refrained from providing any significant cues about whether the central bank will raise interest rates again in the last monetary policy meeting of this year in December. “We will scrutinize data available at the time at each policy meeting, and update our view on the economy and outlook in deciding policy,” Ueda said, The Japan Times reported.

The Japanese economy needs to be vigilant to domestic recovery and the impact of the United States (US) economy on them due to presidential elections on November 5 in which the traders seem to be pricing in the victory of former President Donald Trump over current Vice President Kamala Harris.

Though investors have underpinned the Euro (EUR) against the Japanese Yen (JPY) on Thursday, the shared currency is more than 6% higher versus the Yen in the past six weeks. Still, the Euro is outperforming its major peers on Eurozone robust preliminary Q3 Gross Domestic Product (GDP) growth and flash hot inflation data for October.

The Eurozone economy expanded at a faster-than-expected pace of 0.9% compared to the same quarter of the preceding year against 0.6% growth in the previous quarter. Meanwhile, the flash Harmonized Index of Consumer Prices (HICP) accelerated at a faster pace to 2% from 1.7% in September.

• EUR/JPY drops to around 165.85 in Thursday’s Asian session. 
• The BoJ decided to leave policy settings unchanged at its October meeting on Thursday.
• The Eurozone economy grew 0.4% QoQ in Q3, stronger than expected

The EUR/JPY cross attracts some sellers to near 165.85 during the Asian session on Thursday. The Bank of Japan (BoJ) decided to keep its policy rate unchanged, as widely expected.

The Bank of Japan (BOJ) decided to keep the short-term interest rates target unchanged at 0.25% on Thursday and reiterated its forecast that inflation will persist near the 2% target. The upside for the Japanese Yen might be limited amid the uncertainty about Japan's fiscal and monetary policy outlook. "Any strengthening of the yen at present would likely result from a general weakening of the U.S. dollar if interest rates begin to align," noted Sean Teo, a sales trader at Saxo.

Market players will shift their attention to the press conference by BoJ Governor Kazuo Ueda, which might offer some hints about the interest rate path in Japan. Meanwhile, the cautious mood ahead of the US presidential election next week could boost the safe-haven flows, benefiting the JPY. 

On the Euro (EUR) front, the encouraging Eurozone flash Gross Domestic Product (GDP) for the third quarter (Q3) might help limit the EUR’s losses. Data released by Eurostat on Thursday showed that the Eurozone economy grew 0.4% QoQ in Q3, stronger than the 0.2% expected. On an annual basis, the Eurozone GDP expands by 0.9% in Q3, above the market consensus of 0.8%. 

• EUR/JPY sees more upside above 166.00 as upbeat Eurozone Q3 flash GDP has improved the Euro’s outlook.
• The German economy returns to growth, surprisingly rose by 0.2% in the third quarter of the year.
• Investors await the BoJ meeting to get cues about Yen’s outlook.

The EUR/JPY pair aims for a sustainable break above 166.00 in Wednesday’s European session. The cross strives to gain further as the Euro’s (EUR) outlook has improved after a slew of economic data from the Eurozone and its major regions.

The Eurozone flash Gross Domestic Product (GDP) data shows that the economy expanded by 0.9% year-on-year in the third quarter of the year, faster than estimates of 0.8% and the 0.6% growth in the April-June period. Quarterly GDP growth was 0.4%, double the estimates and the former release of 0.2%.

Meanwhile, the return of the German economy to growth after a contraction in the second quarter has also strengthened the Euro. The German economy unexpectedly grew by 0.2% while economists estimated a steady decline of 0.1%. Also, flash Harmonized Index of Consumer Prices in six German states has come in hotter-than-expected, prompting traders to pare European Central Bank (ECB) dovish bets for the December meeting.

According to market expectations, the probability of the ECB reducing its Deposit Facility Rate by 50 basis points (bps) in December has eased to 22% from 45% after the GDP and inflation data release.

On the Tokyo front, investors await the Bank of Japan’s (BoJ) policy meeting on Thursday. The BoJ is expected to leave interest rates unchanged at 0.25%. Lately, the Japanese Yen (JPY) has remained under pressure due to market expectations of BoJ’s incapability to hike interest rates further as traders doubt economic sustainability after the Liberal Democratic Party (LDP) failed to gain a majority in national elections.

Signs of hawkish interest rate guidance would prompt a strong recovery in the Japanese Yen, while the downside would be limited if the BoJ remains dependent on incoming data.

• EUR/JPY drifts lower to around 165.75 in Wednesday’s early European session. 
• The constructive outlook of the cross remains intact, with the bullish RSI indicator. 
• The immediate resistance level emerges at the 166.00-166.10 region; the first support level is seen at 165.16.

The EUR/JPY cross weakens to near 165.75 during the early European trading session on Wednesday. The anticipation that the European Central Bank (ECB) would cut its Deposit Facility Rate again this year exerts some selling pressure on the Euro (EUR). 

According to the 4-hour chart, the positive outlook of EUR/JPY prevails as the cross holds above the key 100-period Exponential Moving Average (EMA). Additionally, the upward momentum is supported by the Relative Strength Index (RSI), which stands above the midline near 62.20, supporting the buyers in the near term. 

The first upside barrier for the cross emerges at the 166.00-166.10 zone, representing the high of October 29 and the psychological level. A decisive break above this level could see a rally to 166.55, the upper boundary of the Bollinger Band. The next resistance level is located at 167.95, the high of July 30. 

On the downside, the initial support level for EUR/JPY is seen at 165.16, the low of October 29. Any follow-through selling below the mentioned level could see a drop to 164.32, the low of October 26. The additional downside filter to watch is 164.06, the lower limit of the Bollinger Band. 

EUR/JPY 4-hour chart

• EUR/JPY eyes above 166.00 amid weakness in the Japanese Yen.
• The BoJ seems incapable of hiking interest rates further.
• Investors await Eurozone macroeconomic data and the BoJ policy announcement.

The EUR/JPY pair aims to extend its rally above the immediate resistance of 166.00 in Tuesday’s North American. The cross remains firm as the Japanese Yen (JPY) weakens across the forex domain amid expectations that the Bank of Japan (BoJ) is incapable of hiking interest rates further in the remaining year.

Market speculation for the BoJ to leave interest rates unchanged at their current levels by the year-end has strengthened after the outcome of Japan elections in which the ruling party failed to gain a majority. This has raised uncertainty over economic growth stability.

Meanwhile, investors await the BoJ’s interest rate decision on Thursday in which the central bank is expected to leave its key borrowing rates unchanged at 0.25%. Therefore, investors will keenly focus on the interest rate guidance.

In the Eurozone region, investors await a string of macroeconomic data such as preliminary Gross Domestic Product (GDP) and the Harmonized Index of Consumer Prices (HICP) data for October, which will be published on Wednesday and Thursday, respectively. The economic data will significantly influence market expectations for the European Central Bank’s (ECB) likely size for interest rate cuts in its last monetary policy meeting of this year in December.

A few ECB officials are worried about the risks of price pressures remaining below the bank’s target of 2% for a longer period due to growing downside risks to economic growth.

• EUR/JPY rises to a three-month high of 166.07 on Monday.
• The Japanese Yen received downward pressure as the loss of the LDP coalition increased uncertainty regarding the BoJ rate-hike plans.
• ECB’s Pierre Wunsch said that there is no urgency for the central bank to cut interest rates quickly.

EUR/JPY edges lower around 165.50 during the Asian trading hours on Tuesday, following a three-month high of 166.07 reached on Monday. The Japanese Yen (JPY) has been under pressure due to increasing uncertainty regarding the Bank of Japan's (BoJ) rate-hike plans, particularly after Japan’s Liberal Democratic Party (LDP)-coalition lost its parliamentary majority.

The Bank of Japan’s interest rate decision is set to be the focal point on Thursday, with nearly 86% of economists surveyed by Reuters expecting the central bank to maintain its current rates at the October meeting.

On Tuesday, Japan’s Finance Minister Katsunobu Kato stated that he is “closely watching FX movements, including those driven by speculators, with heightened vigilance,” but refrained from commenting on specific forex levels. Kato emphasized the importance of stable currency movements that reflect economic fundamentals.

On the Euro’s front, policymakers at the European Central Bank (ECB) have expressed differing opinions on monetary policy in recent days. Pierre Wunsch, the Governor of the National Bank of Belgium and a member of the ECB's Governing Council stated on Monday that there is no urgency for the central bank to accelerate interest rate cuts, suggesting it could even tolerate a modest rate.

In contrast, Mario Centeno, Governor of the Bank of Portugal, argued that a 50 basis point rate cut should be considered as a potential option for December. Meanwhile, Governor of the Bank of Italy Fabio Panetta raised concerns about whether the ECB could halt rate cuts once it reaches a neutral level, where monetary policy no longer restricts growth.

• The Euro pulls back from post-election highs as the Yen recovers.
• The political uncertainty in Japan puts BoJ tightening plans into question and will weigh on the Yen.
• Later this week, Eurozone GDP and CPI data might boost hopes of a large ECB cut and add pressure on the Euro.

The Euro has failed to find acceptance above 166.00 earlier today and has given away gains. The Yen has trimmed losses as the market digests the results of Japan´s elections and the pair has retreated to rest support at last week’s high, at 194.90.

The Yen dropped across the board during the early Asian season on Monday, weighed by the defeat of the ruling coalition in the Japanese elections. The hung parliament coming out of the elections opens an uncertain period in the world’s fourth-largest economy, leaving support for the BoJ’s monetary tightening plans in the air.

The Bank of Japan is meeting this week and, in the current context, they are widely expected to leave interest rates unchanged. This is likely to keep Yen's recovery limited.

The Euro, however, has weaknesses of its own. German GDP is expected to have contracted for the second consecutive quarter, weighing on the region’s growth.

If these figures are confirmed and are accompanied by a weak inflation reading speculation about a large ECB cut in December will increase, bringing the Euro lower across the board. 

• EUR/JPY jumps to a three-month top amid the heavily offered tone surrounding the JPY.
• Japan’s political development raises doubts over more BoJ rate hikes and weighs on the JPY.
• Bets for aggressive ECB policy easing undermine the Euro and cap the upside for the cross.

The EUR/JPY cross opens with a modest bullish gap on Monday and touches a three-month top during the Asian session, albeit it struggles to capitalize on the move beyond the 166.00 mark. Spot prices currently trade around the 159.65-159.70 region, up over 0.75% for the day, and now seem to have confirmed a bullish breakout above a technically significant 200-day Simple Moving Average (SMA). 

The loss of a parliamentary majority for Japan's ruling coalition in weekend elections adds to a layer of uncertainty over the Bank of Japan's (BoJ) rate-hike plans. This, along with a generally positive risk tone, weighs heavily on the safe-haven Japanese Yen (JPY) and turns out to be a key factor that provides a goodish lift to the EUR/JPY cross. That said, the recent verbal intervention by Japanese authorities holds back the JPY bears from placing aggressive bets. 

In fact, Japan's Economy Minister Ryosei Akazawa said on Friday that it is important for currencies to move in a stable manner reflecting fundamentals and that a weak yen has various impacts on the economy. This comes on top of the comments from Japan's vice finance minister for international affairs, Atsushi Mimura, earlier this month, saying that excess volatility in the market is undesirable and that authorities are closely watching FX moves with a high sense of urgency.

Apart from this, some safe-haven demand stemming from the ongoing conflicts in the Middle East and the risk of a broader war in the region acts as a tailwind for the JPY. The shared currency, on the other hand, is undermined by firming expectations for a more aggressive policy easing by the European Central Bank (ECB) amid signs of easing inflationary pressures and economic weakness. This contributes to keeping a lid on the EUR/JPY cross and warrants caution for bulls. 

Nevertheless, a breakout and acceptance above the very 200-day SMA, for the first time since late July supports prospects for a further near-term appreciating move. This, in turn, suggests that any intraday pullback might be seen as a buying opportunity and remain limited near the said resistance breakpoint amid absent relevant market-moving economic releases and ahead of the BoJ monetary policy meeting later this week.

• EUR/JPY has broken above the ceiling of its multi-month range indicating it could be poised to move even higher. 
• Resistance from the 100 and 200-day SMA remains the last hurdle before bulls can run free. 

EUR/JPY pierced cleanly through the ceiling of its multi-month range and appears to have established a foothold in the territory above. 

Thursday’s mild withdrawal soon found support at the top of the range in the 163.80s suggesting resistance has metamorphosed into support. On Friday price has so far also remained above the range ceiling. 

Lying immediately above price however is stiff resistance from a cluster of the (blue) 100 and (green) 200-day Simple Moving Averages (SMA).  

EUR/JPY Daily Chart 

The short and medium-term trends are bullish suggesting the odds favor more upside to come, however, the two SMAs are major obstacles that need to be traversed before bulls can be confident of following through higher. 

A break above 164.90 would probably confirm a decisive break above these two SMAs and result in a move up to the minimum target for the breakout from the range at 169.68. This is the 61.8% Fibonacci extrapolation of the height of the range to the upside. 

Alternatively, it is still also possible EUR/JPY could capitulate back inside the range. However, for this to be confirmed, price would have to break below 161.85 (October 17 swing low). This seems less likely given the decisive way in which price broke out of the ceiling of the range on Wednesday. 

The Relative Strength Index (RSI) momentum indicator is not yet in the overbought zone (above 70) suggesting the pair has room to go higher.

• 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.