EUR/JPY flat-lines above 158.00 mark, eyes ECB decision for fresh directional impetus

EUR/JPY attracts some dip-buying on Thursday, albeit lacks strong follow-through.
Bets that the BoJ will end its ultra-easy monetary policy lift the JPY and cap gains.
Traders keenly await the pivotal ECB rate decision before placing directional bets.

Haresh Menghani FXStreet

The EUR/JPY cross reverses an intraday dip to sub-158.00 levels and climbs to a fresh daily peak during the early part of the European session on Thursday. Spot prices currently trade around the 158.20-158.20 region, unchanged for the day, as traders keenly await the outcome of the highly-anticipated European Central Bank (ECB) meeting.

Market participants remain divided on whether the ECB will hike interest rates for a 10th straight time amid still-hight inflation or pause its historic policy-tightening cycle in the wake of a darkening Euro Zone economic outlook. A recent Reuters report, however, suggested that the central bank could revise its 2024 inflation forecast upwards, well past the 3% mark, and revive speculations about a potential rate hike. Hence, the pivotal ECB rate decision will play a key role in influencing the sentiment surrounding the shared currency and provide a fresh directional impetus to the EUR/JPY cross.

In the meantime, bets that the Bank of Japan (BoJ) will end its ultra-easy monetary policy underpin the Japanese Yen (JPY) and should cap the upside for the EUR/JPY cross. Investors now seem convinced that BoJ may scrap its yield-curve control (YCC) policy and put an end to negative interest rates as early as this year. The expectations were lifted by BoJ Governor Kazuo Ueda's remarks over the weekend. In an interview with Yomiuri newspaper, Ueda said that raising interest rates is among the options available if the BoJ becomes confident that prices and wages will keep going up sustainably.

Apart from this, worries about the worsening economic conditions in China could further benefit the JPY's relative safe-haven status and contribute to keeping a lid on the EUR/JPY cross. Heading into the key central bank event risk, the aforementioned fundamental backdrop warrants some caution before placing fresh bullish bets around the cross and positioning for an extension of this week's bounce from over a one-month low. The focus will then shift to the Chinese macro data dump, scheduled for release during the Asian session on Friday, which could further infuse volatility in the global financial markets.

Technical levels to watch

EUR/JPY

Overview
Today last price	158.22
Today Daily Change	0.00
Today Daily Change %	0.00
Today daily open	158.22

Trends
Daily SMA20	158.21
Daily SMA50	157.18
Daily SMA100	154.33
Daily SMA200	148.61

Levels
Previous Daily High	158.66
Previous Daily Low	158.01
Previous Weekly High	158.52
Previous Weekly Low	157
Previous Monthly High	159.76
Previous Monthly Low	155.53
Daily Fibonacci 38.2%	158.41
Daily Fibonacci 61.8%	158.26
Daily Pivot Point S1	157.94
Daily Pivot Point S2	157.65
Daily Pivot Point S3	157.29
Daily Pivot Point R1	158.58
Daily Pivot Point R2	158.94
Daily Pivot Point R3	159.23

Author

Haresh Menghani

FXStreet

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

AUD/USD consolidates above 0.7000; remains close to monthly top

AUD/USD holds steady above 0.7000 during the Asian session on Friday, trading just below the previous day's monthly low amid diverging forces. A hawkish RBA continues to support the Aussie, while the recent decline in US bond yields keeps the US Dollar depressed near a three-week low. However, oil-driven inflation fears reinforce Fed hike bets, which, along with geopolitical risks, could benefit the safe-haven buck and cap the currency pair.

USD/JPY bounces off one-month low; climbs to 157.00 amid reviving USD demand

USD/JPY rebounds from the 156.00 neighborhood, or a one-month low touched during Friday’s Asian session, with bulls looking to extend momentum beyond 157.00 amid the emergence of some US Dollar buying. Meanwhile, Japan's National CPI rose to a nine-month peak and reaffirmed BoJ rate-hike bets, which could support the Japanese Yen and cap gains for the currency pair.

Gold treads water around $4,000

Gold prices maintain its offered stance in place at the end of the week, hovering around the key $4,000 threshold per troy ounce. The persistent selling bias in the precious metal comes amid decent gains in the US Dollar and an acceptable rebound in US Treasury yields across the curve, all alongside further upside traction in crude oil prices.

Crypto Today: Bitcoin holds the 50-day EMA as Ethereum and XRP face structural resistance

Bitcoin gradually ticks up on Friday, trading above $81,000. The Crypto King has recently defended structural support near $80,000, reinforcing the prevailing bullish outlook. Ethereum similarly edges higher above $2,400, while Ripple trades above $1.32 after testing support around $1.30.

The French bond panic is overdone. Here's what the market is misreading

France's 10-year government bond yield has climbed above 5%, reigniting fears of a sovereign debt crisis in the Eurozone. With public debt exceeding €3.5 trillion, persistent budget deficits and a fragmented political landscape, investors are increasingly questioning the French government's ability to stabilize its finances.

What November 3 means for the Fed's rate path and the US Dollar

The USD faces a decisive period ahead of the November 3 midterm elections. While markets anticipate another interest rate increase from the Fed in December, the battle for control of Congress could reshape fiscal policy expectations and, indirectly, the path of US monetary policy in 2027.