Piece written by Mfanafuthi Mhlongo, Trive Financial Market Analyst
The strong Japanese trade data failed to halt the EURJPY currency pair’s trend higher as market sentiment remained slightly bullish. The Bank of Japan (BoJ) has maintained its ultra-dovish policy stance, and the European Central Bank (ECB) is expected to raise interest rates by 25 basis points (bps) to 4% in the next meeting.
The final reading of the Eurozone Core Harmonized Index of Consumer Prices (HICP) rose 0.4% MoM for June versus 0.3% prior and above the market consensus. Markets have priced in a 25 basis point (bps) hike for the next ECB meeting, with the odds of a hike in September hovering around 65%.
On the other hand, Japan’s trade balance surprised the market with its first surplus since July 2021, easing pressure on the economy’s recovery. That said, the nation’s trade surplus came to ¥43 billion. Market consensus had forecast a ¥46.7 billion deficit. The value of exports rose 1.5%, while Imports fell 12.9%. On Tuesday, the Bank of Japan (BoJ) Governor Kazuo Ueda stated that there was still some way to go before reaching the 2% inflation target, with the central bank likely to keep the rates unchanged and the ultra-loose monetary policy intact on Friday, 21st of July 2023.
Technische Analyse
The 4H chart shows that the pair is currently trading above the 50-EMA and the 23.60% Fibonacci retracement level. This could suggest the presence of bullish momentum and that the pair could continue to rise in the near term. The immediate resistance level is at 157.190. If the price action sustains a break above this level, the next resistance level is at the major resistance level of 157.991 (green line).
However, should the price action sustain a push below the 23.60% Fibonacci retracement level, short-term trading opportunities could exist as the price moves towards the 50-EMA and the channel’s support. Immediate support past the level is at the 61.80% Fibonacci retracement level of 154.790, with a break below the level likely to trigger a run towards the major support level at 153.587 (red line).
Zusammenfassung
The EURJPY pair is in a bullish trend and could continue to rise in the near term, with the 157.190 price level the initial level of interest.
However, it is worth noting that the renewed trade war tensions between the US and China might cap the upside in the Euro and support the safe-haven Japanese Yen. Market participants could need to keep a keen eye on Sino-US relations for fresh impetus.
Quellen: TradingView, Reuters, Trading Economics, CNBC.
