EURJPY is setting up for significant shifts—traders, be ready!
The EURJPY pair reflects the Euro and Japanese Yen exchange rate. Traders frequently use the EURJPY pair to gauge market risk sentiment. The Euro is primarily driven by economic indicators from major economies like Germany and France, monetary policy decisions by the European Central Bank, and geopolitical events within the Eurozone. On the other hand, the Yen is sensitive to Japan’s economic performance but is also known for its status as a safe-haven currency, meaning it often strengthens during global financial uncertainty.
Japan Gross Domestic Product (GDP) QoQ, Sep 09, 01:50 (GMT+2)
The upcoming release of Japan's quarterly GDP is forecasted to show a recovery, with an expected growth of 0.8%, compared to the previous contraction of -0.5%. If the actual GDP figure surpasses this forecast, it would indicate stronger-than-expected economic growth in Japan. A better-than-expected GDP would likely boost the Yen as confidence in Japan's economic recovery grows. And Yen's strength may lower EURJPY.
Conversely, the Yen could lose value if the GDP result is weaker than the forecast, suggesting Japan’s economic recovery is faltering. In this case, traders may move away from the Yen, causing the EURJPY pair to rise as the Euro gains relative strength.
The last time the May 16, 2024, report from the GDP QoQ came in significantly worse than expected, causing EURJPY to rise!
Eurozone Interest Rate Decision, Sep 12, 14:15 (GMT+2)
The Eurozone’s interest rate decision is anticipated to result in a rate cut to 4.0% from the current 4.25%, which would signal a dovish stance from the European Central Bank. If the ECB goes ahead with the forecasted cut, the Euro might weaken as lower interest rates reduce the currency’s appeal to investors seeking higher returns. In this case, the EURJPY pair could decline.
However, if the ECB surprises the market by keeping rates unchanged, signaling concerns about inflation, the Euro could strengthen. A stronger-than-expected stance on interest rates would likely push the EURJPY pair higher.
In the Daily timeframe, EURJPY formed an expanding wedge pattern after a short-term bullish rise. The price fell to the lower trend line, testing the critical support area and the lower Bollinger line. At the same time, the %R shows oversold.
If the price breaks the lower trend line below 158,000, the downside target would be 154,000.
A bounce from the lower trend line will bring EURJPY back to the resistance at 163.800.
