- The shared currency is registering gains of 3% in the week vs. the yen.
- Risk-aversion and ECB’s meeting to keep the pair in choppy trading.
- ECB Preview: Forecasts from eight major banks, ready for lift-off.
- EUR/JPY Price Forecast: A break above 144.14 to open the door towards 147.00s.
The shared currency moves to seven-year-highs around 144.25, spurred by a weaker Japanese yen, tumbling against most G8 currencies. At the time of writing, the EUR/JPY is trading at 143.84, recording minimal gains of 0.01% as the Asian Pacific session begins.
Risk-aversion and ECB’s meeting to keep the pair in choppy trading
Sentiment remains negative on concerns that central banks hiking rates will weigh on the economic growth. Reflecting that, are US equities snapping two days of gains. Asian equity futures fluctuate, reflecting a mixed mood, while EUR/JPY traders brace for the European Central Bank (ECB) monetary policy meeting on Thursday.
The European Central Bank (ECB) is set to announce the end of its APP program, though it would keep rates unchanged. Market players expect Mrs. Lagarde and Co. to lay the ground for a July lift-off while finishing the Quantitative Easing.
Still, investors’ only doubt is if the ECB would guide the markets regarding the pace of rate increases, as some ECB Governing Council (GC) members leaned toward 50 bps hikes, except for Mrs. Lagarde and the ECB’s Chief Economist Philip Lane.
In the meantime, money market futures have priced in around 132 bps of tightening this year, which would imply 25 bps hikes at the three of the four meetings after June, with one meeting expected to see a 50 bps rate raise.
EUR/JPY Price Forecast: Technical outlook
The EUR/JPY weekly chart depicts the cross-currency as upward biased, though it is about to face solid resistance, at around 144.16, January’s 2015 highs. It’s worth noting that the Relative Strength Index (RSI) just reached overbought conditions at 71, which means that the EUR/JPY might consolidate before resuming the uptrend.
Nevertheless, if the EUR/JPY aims higher, the first resistance would be 144.16. A breach of the latter would expose December 29, 2014, high at 147.22, followed by December 15, 2014, high at 148.23, and December 8, 2014, daily high near 149.78
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