CFD Trading Rate Euro vs Japanese Yen (EURJPY)

• EUR/JPY attracts fresh buyers on Monday and moves back closer to last week’s swing high.
• Dovish BoJ's remarks, along with a positive risk tone, undermine the JPY and offer support.
• Expectations for an imminent shift in the BoJ’s policy and ECB rate cut bets cap the upside.

The EUR/JPY cross regains positive traction on the first day of a new week and climbs back above the 161.00 round-figure mark during the Asian session. Spot prices remain well within the striking distance of over a two-week high touched on Friday and seem poised to prolong the recent appreciating move from the vicinity of the 158.00 mark, or the monthly trough.

Last week's dovish remarks by the Bank of Japan (BoJ) Deputy Governor Shinichi Uchida, saying that aggressive tightening is unlikely even after an exit from negative interest rate policy, continue to undermine the Japanese Yen (JPY). Apart from this, a generally positive risk tone further contributes to safe-haven JPY's relative underperformance and turns out to be another factor lending support to the EUR/JPY cross.

Expectations that Chinese authorities will do more to stimulate the economy, along with easing fears about a further escalation of geopolitical tensions in the Middle East, remain supportive of the recent risk-on rally across the global equity markets. In fact, the Israel military said on Monday that it had concluded a series of strikes in southern Gaza days after Prime Minister Benjamin Netanyahu rejected a ceasefire proposal from Hamas.

That said, growing acceptance that the BoJ will eventually abandon its ultra-loose monetary policy settings after the outcome of annual wage negotiations in March should help limit the downside for the JPY. Apart from this, rising bets that the European Central Bank (ECB) will start cutting interest rates at the start of the second quarter might hold back bulls from placing fresh bets around the shared currency and cap the EUR/JPY cross.

The bets were reaffirmed by a fall in German inflation, which eased to the 3.1% YoY rate in January from the 3.8% in the previous month. Adding to this, ECB Governing Council member Fabio Panetta said on Saturday that the moment is fast approaching for the central bank to cut interest rates. Panetta added that timely and gradual steps could help to reduce ensuing volatility in financial markets and the economy.

This, in turn, warrants caution before positioning for any further appreciating move in the absence of any relevant market-moving economic releases on Monday. Moving ahead, investors now look to the first estimate of the fourth-quarter GDP growth figures from the Eurozone and Japan, due for release on Wednesday and Thursday, respectively, which, in turn, should provide a fresh impetus to the EUR/JPY cross.

Technical levels to watch

• EUR/JPY hits year-to-date high, buoyed by positive sentiment and BoJ dovish comments.
• Above 161.00, eyes on 162.00 resistance; below 160.27 swing low may test 160.00 support.
• Technical analysis hints at pullback, with critical supports at 160.00, today’s low 160.77, and pivot 160.46

The EUR/JPY pierces the 161.00 figure and hits a two-week high of 161.26, courtesy of a risk-on impulse and “dovish” comments by a Bank of Japan (BoJ) member. At the time of writing, the pair hovers around 161.00, clocking minimal 0.05% gains.

The daily chart portrays the EUR/JPY pair is upward biased. Still, Friday’s price action is shaping a doji, which indicates neither buyer's nor sellers' commitment to their positions. With that said, if buyers reclaim 161.00, look for an upside move to 162.00. On the flip side, if sellers step in and clear the February 5 swing low of 160.27, that could pave the way to challenge 160.00.

EUR/JPY Price Action – Daily Chart

In the short term, the divergence between EUR/JPY price action and Relative Strength Index (RSI) studies could open the door for a pullback. The first support is seen at 160.00 the confluence of the Tenkan and Kijun-Sen, followed by today’s low of 160.77, followed by the daily pivot at 160.46.

EUR/JPY Price Action – Hourly Chart

• EUR/JPY trades weaker near 160.90 in Friday’s early European session. 
• The German Harmonized Index of Consumer Prices (HICP) rose 3.1% YoY in January, in line with market expectations.
• The Japanese Yen was further weakened by dovish comments from Bank of Japan (BoJ) policymakers on Thursday.

The EUR/JPY cross snap a two-day winning streak below the 161.00 psychological mark during the early European session on Friday. The cross attracts some intraday sellers following the German inflation data. Investors await German Buba President Nagel's speech later on Friday for fresh catalysts. At press time, EUR/JPY is trading at 160.90, down 0.02% on the day.

The latest data from the German statistics office Destatis on Friday showed that the German Harmonized Index of Consumer Prices (HICP) rose 3.1% YoY in January. This figure was in line with market expectations. On a monthly basis, the nation’s HICP dropped 0.2% MoM in January from a 0.2% decline in December. Additionally, the headline Consumer Price Index (CPI) came in at 0.2% MoM and 2.9% YoY in January.

European Central Bank (ECB) Governing Council member Martins Kazaks said investor hopes for monetary easing at one of the next two meetings might be too aggressive. Kazaks further stated that he will wait until the inflation story is over, and then he will consider rate cuts step by step. Meanwhile, ECB Chief Economist Philip Lane and ECB policymaker Pierre Wunsch said that they prefer to wait for more data before cutting rates.

On the other hand, the dovish remarks from the Japanese policymakers weigh on the Japanese Yen (JPY) and act as a tailwind for the EUR/JPY cross. The Bank of Japan (BoJ) Deputy Governor Shinichi Uchida said that the central bank will not hike aggressively upon ending negative rates, even after ending its negative interest rate policy. Furthermore, BoJ Governor Kazuo Ueda said on Friday that the possibilities are high for accommodative conditions to stay even if negative rates are abandoned.

Later on Friday, traders will monitor the Italian Industrial Output and German Buba President Nagel's speech. Next week, the Eurozone and Japan’s Gross Domestic Product (GDP) for the fourth quarter (Q4) will be released. Traders will find trading opportunities around the EUR/JPY cross.

• EUR/JPY refreshes weekly high near 160.50 on BoJ Shinichi’s dovish commentary.
• The BoJ may exit from its expansionary policy stance only after the wage cycle heightens.
• The Eurozone economy might remain stagnant in the fourth quarter of 2023.

The EUR/JPY prints a fresh weekly high near 160.50 in the European session on Thursday after dovish commentary from Bank of Japan (BoJ) Deputy Governor Uchida Shinichi. BoJ Shinichi said the central bank would be reluctant to raise interest rates aggressively despite exiting the decade-long ultra-dovish monetary policy.

Uchida Shinichi added that monetary policy conditions in the Japanese economy are in a deep negative trajectory, which is not expected to get blown up aggressively.

The Japanese Yen has been under pressure as BoJ policymakers run behind the market’s expectations of adopting a neutral stance. Slower wage growth momentum has been limiting hopes of exiting from an easy policy stance, limiting the sustainability of price pressures above 2%. Meanwhile, deepening geopolitical tensions have escalated uncertainty over restrictive policy stance.

On the Eurozone front, a vulnerable economic outlook has prompted expectations of early rate cuts by the European Central Bank (ECB). ECB policymaker Pablo Hernandez de Cos said this week, "it is already very important for European citizens to know that we are confident the next move will be a cut.” ECB Cos remains confident about inflation declining towards the 2% target.

On the contrary, the ECB Economic Bulletin released in early London indicated that Governing Council (GC) members will ensure that key rates remain sufficiently restrictive as long as price stability is ensured. Over the economic outlook, GC members anticipate a stagnant performance for the final quarter of 2023.

• EUR/JPY falls as 'evening star' pattern suggests potential reversal.
• Dip below 160.00 and Tenkan-Sen (159.52) indicates momentum shift; 159.00 next support with further declines might eyeing Ichimoku Cloud top.
• Recovery above Tenkan-Sen may target 160.00 again, with 161.87 as potential high.

The EUR/JPY drops from around weekly highs reached on Monday at 160.27 and forms a three-candle ‘evening star’ chart pattern, that opens the door for further losses. At the time of writing, the cross-pair exchanges hands at 159.05, down 0.42%.

The bullish bias is at risk with the pair sliding below crucial support levels. As sellers pushed the exchange rate below the 160.00 figure and the Tenkan-Sen level at 159.52, the first support emerging is 159.00, followed by the top of the Ichimoku Cloud (Kumo) at 158.73. If those two levels are cleared, the next support emerges at the confluence of a support trendline, the Senkou Span B and the Kijun Sen, at around 158.40/48.

On the other hand, if EUR/JPY buyers lift the exchange rate towards the Tenkan-Sen, that could open the door to challenge the 160.00 psychological level. A breach of the latter will expose the current year-to-date (YTD) high at 161.87.

EUR/JPY Price Action – Daily Chart

EUR/JPY Key Technical Levels

• EUR/JPY edges lower to 159.60 amid the BoJ’s hawkish tilt and safe-haven flows.
• Investors anticipate the ECB to embark on the first rate cut at the June meeting.
• BoJ policymakers hinted about the monetary policy shift, which lifts the Japanese Yen. 
• The Eurozone Retail Sales will be released later on Tuesday. 

The EUR/JPY cross extends its downside above the mid-159.00s during the early European session on Tuesday. Investors await the December Eurozone Retail Sales for fresh catalysts. Meanwhile, the hawkish tilt from the Bank of Japan (BoJ) and ongoing geopolitical tensions in the Middle East might boost the safe-haven Japanese Yen (JPY) against the Euro (EUR). The cross currently trades near 159.60, losing 0.05% on the day.  

On Monday, Germany’s Trade Balance rose to €22.2 billion in December from the previous reading of €20.7 billion. German Imports fell 6.7% in the same period versus a 1.5% rise prior and the exports dropped 4.6% in December from a 3.5% rise in November. Furthermore, Germany’s HCOB Composite Purchasing Manager’s Index (PMI) came in at 47.0 versus the expectation and the previous reading of 47.1. Investors continue to expect the ECB to embark on the first rate cut at the June meeting. However, incoming data such as inflation and wage growth will confirm an inflation path of 2%.

On the Japanese Yen front, the Bank of Japan (BoJ) is preparing to exit negative interest rates by April and overhaul other components of its ultra-loose monetary framework. However, the central bank is likely to go slow on any subsequent policy tightening amid the continuing risks. The hawkish stance from the BoJ could provide some support to the Japanese Yen (JPY) and act as a headwind for the EUR/JPY cross. 

Traders will focus on Eurozone Retail Sales, which are projected to drop 1.0% MoM and 0.9% YoY in December. Traders will take cues from the figures and find trading opportunities around the EUR/JPY cross. 

• EUR/JPY rises to 160.07 amid risk-on mood, US equity gains, surpassing key 160.00 mark.
• Technical outlook hints at further rise, aiming for January 19 high at 161.81, with 162.00 as next goal.
• Falling below 160.00 may lead to support retest at Tenkan-Sen, Kijun-Sen, suggesting Ichimoku Cloud consolidation.

The EUR/JPY edged higher late during Friday’s North American session, with buyers reclaiming the 160.00 figure on a risk-on impulse, as US equities traded with solid gains. At the time of writing the cross-pair exchanges hands at 160.07

After dipping inside the Ichimoku Cloud (Kumo) and hitting a weekly low of 158.08, the EUR/JPY recovered ground and regained key resistance levels, with buyers clearing the Tenkan-Sen at 159.83, which opened the door toward the 160.00 mark. If buyers achieve a daily close above, that could open the door to challenge the next cycle high at 161.81, the January 19 high. Further upside is seen at 162.00.

Failure at 160.00 could motivate sellers to drive prices inside the Kumo towards the first support level seen at the Tenkan-Sen, followed by the 159.00 figure, ahead of challenging Kijun-Sen at 158.47.

EUR/JPY Price Action – Daily Chart

EUR/JPY Technical Levels

• EUR/JPY struggles to find a direction after a choppy session.
• The Euro faced a challenge of the possibility of the ECB rate cut in June.
• Middle East tension might have driven the foreign investments towards the safe-haven JPY.

EUR/JPY experiences difficulty in establishing a clear direction after a choppy previous day, hovering around 159.20 during the Asian session on Friday. The Euro (EUR) gained upward support following the release of mixed Eurozone inflation data on Thursday, consequently providing a foundation for the EUR/JPY cross.

In January, the Eurozone preliminary Core Harmonized Index of Consumer Prices (YoY) registered an increase of 3.3%, surpassing the expected 3.2% growth but slightly lower than the prior 3.4%. The annual Consumer Price Index met expectations at 2.8%, consistent with the previous reading of 2.9%. However, the month-over-month report indicated a decline of 0.4%, contrasting with the 0.2% rise observed in December.

However, the Euro faced a challenge due to the heightened market expectations of an interest rate cut by the European Central Bank (ECB) in June, which could be attributed to the softer preliminary Consumer Price Index (CPI) data from Germany. This, in turn, might have capped the advance of the EUR/JPY cross.

Moreover, ECB member Mario Centeno has suggested that if inflation continues on its current trajectory in the coming months, the ECB's next probable action would be to cut rates. If such a move materializes, it could signal the beginning of a cycle aimed at the normalization of interest rates.

The Bank of Japan's (BoJ) hawkish stance has bolstered the Japanese Yen (JPY), finding support amid geopolitical tensions in the Middle East. Escalated tensions have prompted investors to seek the safe-haven qualities of the JPY.

For the week ending January 26, Foreign Bond Investment in Japan recorded inflows of ¥382.9 billion, a notable increase from the previous week's outflows of ¥-43.5 billion. Additionally, Foreign Investment in Japanese Stocks rebounded during the same week, rising to ¥720.3 billion compared to the previous week's ¥287 billion.

• EUR/JPY up 0.14%, rebounding from weekly low amid weaker Yen and improved risk sentiment.
• Hammer pattern suggests further gains, targeting the 160.00 level for recovery continuation.
• Downside risks with support at Kijun-Sen (158.47) and Senkou Span B (158.41) crucial for momentum.

The EUR/JPY stages a comeback after bouncing off a weekly low of 158.08 and rising back above the 159.00 figure, gaining 0.14% at the time of writing. An improvement in risk appetite, along with sudden Japanese Yen (JPY) weakness, opened the door for the Euro’s (EUR) recovery.

From a technical standpoint, the EUR/JPY is forming a hammer after diving inside the Ichimoku Cloud (Kumo), though buyers lifted the pair above the Senkou Span B at 158.41, opening the door for a rally to 159.00. If buyers reclaim the 160.00 figure, that could open the door to challenge January’s 31 high at 160.27.

On the flip side, if the EUR/JPY achieves a daily close below 159.00, that could pave the way for further downside. The first support would be the Kijun-Sen at 158.47, followed by Senkou Span B at 158.41. A breach of the latter will expose the February 1 low of 158.08.

EUR/JPY Price Action – Daily Chart

EUR/JPY Technical Levels

• EUR/JPY edges up after robust Euro area GDP figures and subdued Japanese inflation impact market sentiment.
• Technical analysis suggests a potential move towards the Tenkan-Sen at 160.54, with 161.00 and January 19 high at 161.87 as key resistance levels.
• Downward pressure remains a risk, with crucial support near the 159.50 - 159.70 range and further potential decline towards 159.00 and 158.47.

The EUR/JPY advances modestly on Tuesday, and buyers recover the psychological 160.00 figure. Solid GDP data from the Euro area, along with lower-than-expected inflation data in Japan, eases the pressure off the Bank of Japan (BoJ) to end its ultra-loose policy. At the time of writing, the pair exchanges hands at 160.08, after hitting a daily low of 159.21.

The pair is neutral biased as the daily chat portrays. But, the recent fundamental news, along with an improvement in risk appetite, could pave the way to test resistance at the Tenkan-Sen at 160.54. A decisive break could sponsor a leg-up to the 161.00 mark before buyers step in and lift the exchange rate toward January’s 19 high at 161.87. Further upside is seen at 162.00.

Conversely, if EUR/JPY sellers’ step in and prevent a daily close above 160.00, that would exacerbate a leg-down. The first support would be a seven-month-old support trendline at around 159.50 – 159.70, also a confluence with the Senkou Span A at 159.50. Once that area is cleared, expect a drop to 159.00, before diving to the Senkou Span B at 158.47.

EUR/JPY Price Action – Daily Chart

EUR/JPY Technical Levels

• EUR/JPY bounces from 159.20 as Eurozone preliminary GDP remains slightly better than estimates.
• The Eurozone economy manages to avoid a technical recession.
• BoJ Ueda is not convinced for exiting from expansionary monetary policy due to slower wage growth.

The EUR/JPY discovers buying interest near 159.20 as the Eurostat has reported better-than-anticipated Gross Domestic Product (GDP) data for the last quarter of 2023. The agency has reported that the Eurozone economy remained stagnant against expectations and the prior reading of a 0.1% de-growth in GDP figures.

On an annualized basis, the Eurozone economy grew slightly by 0.1% while investors anticipated a stagnant performance. This indicates that the economy has managed to avoid a technical recession. It would allow the European Central Bank (ECB) to hold the Main Refinancing Operations Rate at 4.5% for a longer period.

Meanwhile, investors keen to know when the ECB will start reducing interest rates. ECB President Christine Lagarde said earlier that inflation is higher than what the ECB want and rate-cuts could start by late Summer. ECB policymaker Mario Centeno argued that the central bank should start cutting rate sooner than later, while avoiding abrupt moves. On the contrary, ECB Governing Council member Peter Kazimir said that a rate cut in June is more likely than April.

On the Tokyo front, investors await the Bank of Japan’s (BoJ) Summary of Opinions (SOP), which will be released on Wednesday. Investors will keenly focus on signals about an exit from the decade-long ultra-loose monetary policy.

BoJ Governor Kazuo Ueda seems reluctant in policy normalization as wage growth is insufficient to keep price pressures above the required rate of 2%.

• EUR/JPY trades weaker near 160.45 in Monday’s European session. 
• The RSI indicator stands in bearish territory below the 50-midline, supporting the sellers in the near term. 
• The immediate resistance level is located at 160.92; the key support level will emerge at 159.90. 

The EUR/JPY cross loses traction below the mid-160s during the early European trading hours on Monday. The preliminary German Gross Domestic Product for the fourth quarter will be released on Tuesday. The quarterly and annual are estimated to shrink by 0.3% and 0.2%, respectively. At press time, the cross is trading at 160.45, losing 0.17% on the day. 

From the technical perspective, the bullish outlook of EUR/JPY looks vulnerable as the cross is set to move below the 100-period Exponential Moving Averages (EMA) on the four-hour chart. Additionally, the Relative Strength Index (RSI) stands in bearish territory below the 50-midline, suggesting that further decline looks favorable in the near term.

A high of January 26 at 160.92 acts as an immediate resistance level for EUR/JPY. The next upside barrier is seen at the upper boundary of the Bollinger Band at 161.10. A bullish breakout above the latter will see a rally to a high of January 23 at 161.70, followed by a high of January 19 at 161.87.

On the other hand, a decisive break below the 50-period EMA at 160.45 will pave the way to the key support level at 159.90, representing the lower limit of the Bollinger Band and the 100-period EMA. Further south, the next downside target to watch is a low of January 16 at 159.24, followed by a low of January 12 at 158.54.

EUR/JPY four-hour chart

• EUR/JPY up 0.39%, rebounding from daily low as Yen weakens in FX market.
• Bullish harami pattern suggests upside potential; resistance at 161.00, then January 19 high.
• Downside risks if below Tenkan/Sen (160.55); next supports at 160.00, 159.69, 159.51.

The EUR/JPY bounces off weekly lows late on Friday’s North American session and is up 0.39% as the Japanese Yen (JPY) remains the laggard across the FX space. At the time of writing, the cross-pair exchanges hands at 160.77 after reaching a daily low of 159.83.

From a technical standpoint, price action in the last couple of days is forming a ‘bullish harami’ two-candle pattern that reassembles an inside day, which leads to price action to the upside. If buyers lift the 161.00, the next resistance would be the January 19 high at 161.87, with the psychological 162.00 up next.

On the flip side, if sellers drop below the Tenkan/Sen at 160.55, the next support would be 160.00, followed by the January 25 daily low of 159.69 and the Senkou Span A at 159.51.

EUR/JPY Price Action – Daily Chart

EUR/JPY Technical Levels

• EUR/JPY snaps its losing streak after the Japanese CPI data.
• The annual Tokyo CPI fell below the BoJ 2.0% target for the first time in nearly two years.
• The Euro received losses as ECB’s Lagarde mentioned the possibility of a rate cut in the summer.

EUR/JPY snaps its four-day losing streak, rebounding to near 160.60 during the European session on Friday. The decelerated Japanese inflation numbers have weakened the Japanese Yen (JPY), which in turn, acts as a tailwind for the EUR/JPY cross.

The annual Tokyo Consumer Price Index (CPI) in Japan's national capital decelerated to 1.6% in January from the previous reading of 2.4%. Consumer inflation has fallen below the Bank of Japan's (BoJ) 2.0% target for the first time in nearly two years. Moreover, Core CPI (YoY) decreased to 3.1% from 3.5% prior.

According to the Bank of Japan (BoJ) Minutes of the December meeting, BoJ Board members expressed their views on the monetary policy outlook and Yield Curve Control (YCC). The consensus among members was the need to "patiently maintain an easy policy." Many members emphasized the importance of confirming a positive wage inflation cycle before considering an end to negative rates and YCC.

Furthermore, BoJ Governor Kazuo Ueda reiterated a strong commitment to achieving the 2.0% inflation target. Ueda's statements indicated a potential gradual reduction of extensive stimulus measures in the future, aligning with the central bank's goals for inflation and economic stability.

On the other side, the European Central Bank (ECB) decided to keep its interest rates unchanged for a third consecutive meeting, contributing to downward pressure on the Euro (EUR). This, in turn, has weighed on the EUR/JPY cross. The ECB maintained its Main Refinancing Operations Rate at 4.50%, and the Deposit Facility Rate at 4.0%.

ECB President Christine Lagarde hinted at the possibility of a rate cut in the summer in the monetary policy statement. Market participants are anticipating a first 50 basis point cut from the ECB by June. Rate swaps currently reflect expectations of a total of 140 basis points in rate cuts from the ECB by the end of 2024.

• EUR/JPY recovers some lost ground near 160.20 on the softer Japanese inflation data. 
• The bullish outlook of the cross remains intact above the key Exponential Moving Averages (EMA). 
• The key resistance level is seen at 161.00; the 159.90-160.00 zone is the crucial support level. 

The EUR/JPY cross snaps a four-day losing streak during the early European trading hours on Friday. The rebound of the cross is supported by weaker-than-expected Japanese CPI inflation data. At press time, the cross currently trades around 160.20, gaining 0.05% on the day. 

Early Friday, the headline Tokyo Consumer Price Index (CPI) eased to 1.6% YoY in January from 2.4% in the previous reading. Meanwhile, the Tokyo CPI ex Fresh Food, Energy came in at 3.1% YoY from 3.5% in December. Finally, the CPI figure ex Fresh Food eased to 1.6% YoY from 2.1% in the previous reading, below the expectation of 1.9%. 

Technically, EUR/JPY keeps the bullish vibe unchanged as the cross holds above the 100-period Exponential Moving Averages (EMA) on the four-hour chart. However, the Relative Strength Index (RSI) stands in bearish territory below the 50-midline, suggesting the sellers look to retain control in the near term.

The confluence of a psychological round mark and a high of January 25 at 161.00 will be the key resistance level for the cross. The next hurdle is seen at the upper boundary of the Bollinger Band at 161.25. A decisive break above the latter will see a rally to a high of January 23 at 161.70, en route to a high of January 19 at 161.87.

On the downside, the crucial support level for the cross will emerge at the 159.90-160.00 region, portraying the lower limit of the Bollinger Band, a low of January 24 and a psychological mark. Any follow-through selling below the mentioned level will see a drop to the 100-period EMA at 159.77. The additional downside filter to watch is a low of January 16 at 159.24, followed by a low of January 12 at 158.54.

EUR/JPY four-hour chart

• EUR/JPY continues weekly drop, struggling to surpass the 162.00 resistance.
• Break below Tenkan-Sen signals decline; 160.18 now pivotal for potential rebound.
• Recovery depends on regaining Tenkan-Sen, eyeing 161.24; downside risks include supports at 159.34, 158.71.

The EUR/JPY remains under pressure extending its losses in the week for the fourth consecutive day, down 0.26% and exchanging hands at 160.13 after hitting a daily high of 160.97.

The cross-pair was bullish biased, but after facing strong resistance at 162.00, has shifted neutral. The EUR/JPY break below the Tenkan-Sen, which lies at 160.22, exacerbated a drop toward a daily low of 159.69. Nevertheless, as the pair has edged toward the confluence of the Tenkan-Sen and the January 11 high at around 160.18, previous support turned resistance has opened the door for further upside.

If buyers regain the Tenkan-Sen, the next resistance would be the November 21 swing low of 161.24 before the EUR/JPY aims toward 162.00.

On the other hand, if sellers keep the exchange rate below the Tenkan-Sen, downside risks are seen below 160.00. The next support would be the Senkou Span A at 159.34, followed by the 159.00 figure. The next stop would be the Senkou Span B at 158.71.

EUR/JPY Price Action – Daily Chart

EUR/JPY Technical Levels

• EUR/JPY gains ground ahead of interest rate decision from European Central Bank.
• BoJ Governor Kazuo Ueda committed to achieving the 2.0% inflation target.
• ECB is expected to maintain the Main Refinancing Operations Rate at 4.50%, and the Deposit Facility Rate at 4.0%.

EUR/JPY snaps its losing streak ahead of the interest rate decision from the European Central Bank (ECB). The EUR/JPY pair advances to around 160.80 during the European trading session on Thursday.

Traders will turn their attention to the upcoming Tokyo Consumer Price Index data scheduled for Friday, aiming to gather more insights into Japan's economic outlook. They could be particularly interested in cues regarding the potential shift of the Bank of Japan's (BoJ) short-term interest rates out of negative territory as the necessary conditions align.

BoJ Governor Kazuo Ueda, however, emphasized a strong commitment to achieving the 2.0% inflation target. Ueda's statements suggested a potential gradual reduction of extensive stimulus measures in the future.

The Ministry of Finance released Japan's Merchandise Trade Balance Total for December on Wednesday, surpassing expectations. Concurrently, Japanese Exports (YoY) showed a notable increase. These better-than-expected readings likely contributed to bolstering the Japanese Yen (JPY) and might have created a headwind for the EUR/JPY pair.

On the other hand, the mixed Purchasing Managers Index (PMI) data from the Eurozone and Germany might have provided some support for the Euro, which in turn, might have limited the losses of the EUR/JPY pair.

European Central Bank is expected to maintain the Main Refinancing Operations Rate at 4.50%, and the Deposit Facility Rate at 4.0%. ECB President Christine Lagarde commented that the central bank could potentially begin reducing interest rates starting from late summer. Lagarde expressed concerns about inflation being higher than the ECB's desired level.

• EUR/JPY rebounds to 160.75 ahead of the ECB rate decision. 
• The cross maintains a bullish outlook above the key Exponential Moving Averages (EMA). 
• The immediate resistance level is seen at 161.40; 160.30 acts as an initial support level for the cross. 

The EUR/JPY cross recovers some lost ground near 160.75 during the early European session on Thursday. The weaker-than-expected German and Eurozone PMI data for January weigh on the Euro (EUR) and act as a headwind for EUR/JPY. Investors await the European Central Bank (ECB) monetary policy meeting on Thursday, with no change in rate expected. 

According to the four-hour chart, the bullish potential of EUR/JPY remains intact as the cross holds above the 100-period Exponential Moving Averages (EMA). It’s worth noting that the Relative Strength Index (RSI) stands below the 50-midline, indicating that further decline cannot be ruled out in the near term. 

The upper boundary of the Bollinger Band at 161.40 acts as an immediate resistance level for the cross. The additional upside filter will emerge at a high of January 23 at 161.70, followed by a high of January 19 at 161.87.

On the other hand, the lower limit of the Bollinger Band at 160.30 acts as an initial support level for EUR/JPY. The crucial contention level is seen near a low of January 24 and a psychological mark at 160.00. A breach of this level will see a drop to the 100-period EMA at 159.72. 

EUR/JPY four-hour chart