EUR/JPY Price Forecast: Recovers strongly from 169.70 as BoJ holds interest rates steady

EUR/JPY rebounds to near 170.80 as the Japanese Yen falls sharply.
The BoJ held interest rates steady at 0.5% but kept the door open for more interest rate hikes.
Investors await the Eurozone flash HICP data for July.

Sagar Dua FXStreet

The EUR/JPY pair attracts significant bids around 169.70 and recovers to near 170.80 on Thursday. The cross snaps three-day losing streak as the Japanese Yen (JPY) weakens after the Bank of Japan (BoJ) left interest rates steady at 0.5%, as expected.

Japanese Yen PRICE Today

The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the weakest against the Australian Dollar.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		-0.24%	-0.05%	0.12%	0.06%	-0.38%	-0.38%	-0.16%
EUR	0.24%		0.18%	0.41%	0.31%	-0.15%	-0.12%	0.10%
GBP	0.05%	-0.18%		0.18%	0.13%	-0.34%	-0.31%	-0.09%
JPY	-0.12%	-0.41%	-0.18%		-0.05%	-0.49%	-0.43%	-0.24%
CAD	-0.06%	-0.31%	-0.13%	0.05%		-0.38%	-0.44%	-0.22%
AUD	0.38%	0.15%	0.34%	0.49%	0.38%		0.03%	0.26%
NZD	0.38%	0.12%	0.31%	0.43%	0.44%	-0.03%		0.23%
CHF	0.16%	-0.10%	0.09%	0.24%	0.22%	-0.26%	-0.23%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).

BoJ Governor Kazuo Ueda has left the door open for more interest rate hikes, in the press conference, citing that the underlying inflation “likely to stall but gradually accelerate”. Ueda added that the Japan-United States (US) trade deal reduces “uncertainty over Japan's economic outlook”, however, the impact of tariffs is yet to emerge. He further added that the BoJ wants to scrutinize, if tariffs impact “Japan's manufacturers and their wages”.

Meanwhile, the Euro (EUR) gains on better-than-projected flash Q2 Gross Domestic Product (GDP) data released on Wednesday. In the second quarter of the year, the Eurozone economic growth came in at 0.1%, while it was expected to remain flat.

Going forward, investors will focus on the Eurozone preliminary Harmonized Index of Consumer Prices (HICP) data for July, which will be released on Friday. In Thursday’s session, investors will monitor the inflation data of July from Germany, France, and Spain.

EUR/JPY bounces back strongly after attracting bids below 170.00. However, its near-term trend remains uncertain as its trades below the 20-day Exponential Moving Average (EMA), which is around 171.37.

The 14-day Relative Strength Index (RSI) oscillates inside the 40.00-60.00 range, indicating a sideways trend.

Going forward, the pair would witness more upside towards the July 2024 high of 175.43 if it breaks above the last week high of 173.25.

On the flip side, a downside move by the pair below the intraday low of 169.70 will push it lower to near the July 1 low of 168.46, followed by the June 19 low of 166.04.

EUR/JPY daily chart

Economic Indicator

BoJ Interest Rate Decision

The Bank of Japan (BoJ) announces its interest rate decision after each of the Bank’s eight scheduled annual meetings. Generally, if the BoJ is hawkish about the inflationary outlook of the economy and raises interest rates it is bullish for the Japanese Yen (JPY). Likewise, if the BoJ has a dovish view on the Japanese economy and keeps interest rates unchanged, or cuts them, it is usually bearish for JPY.

GBP/USD loses momentum, flirts with 1.3200

GBP/USD is struggling to maintain its positive bias on Thursday, retreating toward the 1.3200 region in response to the pick in the buying interest around the Greenback. That said, Cable remains under scrutiny as cautious market sentiment keeps investors focused on the US-Iran conflict and political effervescence in the UK.

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