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EUR/JPY advances beyond 200-day SMA and 163.00 mark; highest since January 27

  • EUR/JPY gains positive traction for the third straight day amid a broadly weaker JPY.
  • Hawkish BoJ expectations could limit JPY losses and cap the upside for spot prices. 
  • Traders might also opt to wait for the highly-anticipated BoJ decision on Wednesday.

The EUR/JPY cross attracts some follow-through buyers for the third straight day on Tuesday and climbs beyond a technically significant 200-day Simple Moving Average (SMA) during the Asian session. The momentum lifts spot prices to the 163.35 area, or the highest level since January 27 in the last hour, and is sponsored by the offered tone surrounding the Japanese Yen (JPY).

The global risk sentiment remains well supported by the latest optimism over China's stimulus measures announced over the weekend to boost domestic consumption. Adding to this hopes for a Ukraine peace deal ahead of talks between US President Donald Trump and Russian President Vladimir Putin further boost investors' confidence. This, in turn, is seen undermining the safe-haven JPY and acting as a tailwind for the EUR/JPY cross.

Any meaningful JPY depreciation, however, seems elusive in the wake of the growing acceptance that the Bank of Japan (BoJ) will continue raising interest rates this year. The bets were reaffirmed by positive results from Shunto spring wage negotiations where firms largely agreed to union demands for strong wage growth for the third consecutive year. This, along with worries about a global trade war, should help limit deeper JPY losses.

Traders might also refrain from placing aggressive bets and opt to move to the sidelines ahead of the crucial BoJ policy decision on Wednesday. Meanwhile, a modest US Dollar (USD) bounce from a five-month low is seen exerting some downward pressure on the shared currency, which might contribute to keeping a lid on the EUR/JPY cross. Next on tap is the release of the German ZEW Economic Sentiment Index.

Economic Indicator

ZEW Survey – Economic Sentiment

The Economic Sentiment published by the Zentrum für Europäische Wirtschaftsforschung measures the institutional investor sentiment, reflecting the difference between the share of investors that are optimistic and the share of analysts that are pessimistic. Generally speaking, an optimistic view is considered as positive (or bullish) for the EUR, whereas a pessimistic view is considered as negative (or bearish).

Read more.

Next release: Tue Mar 18, 2025 10:00

Frequency: Monthly

Consensus: 48.1

Previous: 26

Source: ZEW - Leibniz Centre for European Economic Research

Author

Haresh Menghani

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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