The EUR/JPY cross continues its upward momentum, climbing to around 163.45 during Asian trading hours on Wednesday. The Japanese Yen (JPY) weakened slightly against the Euro (EUR) after the Bank of Japan (BoJ) decided to keep its policy rate unchanged in the 0.40%-0.50% range, following three hikes in the past year.
BoJ Maintains Policy, Market Eyes Future Hikes
As widely expected, the BoJ held interest rates steady, aligning with market predictions. The swaps market now prices in a 71% chance of a rate hike by July and near certainty by October, reflecting expectations of further monetary tightening. Investors are closely watching BoJ Governor Kazuo Ueda’s press conference for any hints on the future rate path.
Despite the JPY’s initial weakness, broader market sentiment remains cautious. Geopolitical tensions in the Middle East could trigger safe-haven flows, potentially supporting the Yen in the near term.
Euro Strengthens on German Fiscal Expansion
On the Euro side, the currency received a boost after the German parliament approved a major spending increase, marking a shift away from decades of fiscal conservatism. The additional spending aims to stimulate economic growth and bolster military capabilities, aligning with broader European defense objectives.
This policy shift has strengthened confidence in the Euro, with analysts noting that a stronger fiscal stance in Germany could provide long-term support for the common currency.
EUR/JPY Technical Outlook
Resistance: The next key upside level is at 164.00, followed by 164.75, a multi-year high.
Support: Initial support is seen at 162.80, with stronger support at 162.20, aligning with the 50-day Exponential Moving Average (EMA).
Momentum Indicators: The Relative Strength Index (RSI) remains above 60, signaling bullish momentum, while the MACD shows continued upward pressure.
Key Events to Watch
BoJ Governor Ueda’s Press Conference (for policy direction signals)
Eurozone HICP Inflation Data (which could impact ECB rate expectations)
Speeches from ECB policymakers (providing insights on future monetary policy)
The EUR/JPY pair remains on a bullish trajectory, but upcoming data and geopolitical risks could influence short-term movements.
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