EUR/JPY advances, still capped by the 20-day SMA

EUR/JPY trades with gains, and jumped back above 158.00.
Higher German yields and monetary policy divergences favour the EUR.
Investors await wage and spending figures from July from Japan this week.

Patricio Martín FXStreet

In Monday’s session, the EUR/JPY cross gained ground and marched towards the 158.15 area, tallying nearly 0.35% daily gains. The Euro trades strong against most of its rivals, while the JPY is one of the worst performers in the session, mainly driven by the Bank of Japan’s (BoJ) ultra-dovish stance.

Christine Lagarde, president of the European Central Bank (ECB), delivered a speech on Monday but refrained from commenting about the upcoming September decision. Joachim Nagel was also on the wires but didn’t give any detailed clues regarding the next monetary policy decisions, and he only showed himself concerned with inflation being too high. Meanwhile, German yields are sharply rising, with the 2,5 and 10-year rates increasing by more than 1%, making the Euro gain interest.

In that sense, the World Interest Rates Probabilities (WIRP) indicates that markets are discounting 25% odds of a 25bps hike in the upcoming Sep 14, 2023 meeting while the chances of a similar hike stand at 45% in October, and at 60% in December. This rate hike path would leave the target rate at 5%.

On the JPY’s side, as the Bank of Japan (BoJ) has stated, changes to monetary policy will only be entertained once local wage and inflation indicators match their projections. Japan will report July household spending figures on Tuesday and cash earnings on Friday, which investors will closely monitor to place their bets on the next BoJ decisions.

EUR/JPY Levels to watch

Observing the daily chart, EUR/JPY displays a neutral to bullish technical outlook for the short term as the bulls gain momentum. The Relative Strength Index (RSI) points north above its middle point while the Moving Average Convergence (MACD) lays out decreasing red bars. Moreover, the pair is below the 20-day Simple Moving Average (SMA) but above the 100 and 200-day SMAs, indicating a favourable position for the bulls in the bigger picture.

Support levels: 158.00, 157.00, 156.00.

Resistance levels: 158.30 (20-day SMA), 159.00, 160.00.

EUR/JPY Daily Chart

EUR/JPY

Overview
Today last price	158.15
Today Daily Change	0.58
Today Daily Change %	0.37
Today daily open	157.57

Trends
Daily SMA20	158.29
Daily SMA50	157.07
Daily SMA100	153.47
Daily SMA200	148.02

Levels
Previous Daily High	157.97
Previous Daily Low	157.06
Previous Weekly High	159.76
Previous Weekly Low	157.06
Previous Monthly High	159.76
Previous Monthly Low	155.53
Daily Fibonacci 38.2%	157.4
Daily Fibonacci 61.8%	157.62
Daily Pivot Point S1	157.1
Daily Pivot Point S2	156.62
Daily Pivot Point S3	156.19
Daily Pivot Point R1	158.01
Daily Pivot Point R2	158.44
Daily Pivot Point R3	158.92

Author

Patricio Martín

FXStreet

Patricio is an economist from Argentina passionate about global finance and understanding the daily movements of the markets.

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