EUR/JPY threatens cycle high following weak Japanese data

EUR/JPY consolidates above 157.00 and threatens the cycle high at 158.00.
The EUR is one of the best-performing currencies on Tuesday, driven by higher German yields.
Weak Japanese data favours a more dovish stance of the BoJ.

Patricio Martín FXStreet

In Wednesday’s session, the EUR/JPY rose near the 157.70 area on the back of a stronger EUR. On the other hand, the JPY weakened after weak economic activity data, which makes investors foresee the Bank of Japan (BoJ) not hurrying to pivot its monetary policy.

Considering this, the German yields are seeing gains across the curve, helping the European currency trade strong against most of its rivals. The 10-year bond yield rose to 2.47%, while the 2-year yield stands at 3.12% and the 5-year yielding 2.52%, respectively with all three seeing gains of more than 1%.

Moreover, no relevant data will be released from the European block this week, and regarding the next European Central Bank (ECB) decisions expectations, investors await the next set of data. Considering that Christine Lagarde is “open-minded” and that the decision will depend on incoming data regarding the September resolution, markets will closely monitor next week’s Q2 Gross Domestic Product (GDP) and inflation data from July from the European Union.

On the Japanese front, Machine Tool Orders came in at -19.8% YoY in July vs the -21.1% expected and its previous figure in May, tallying a contraction for seven straight months. In that sense, weak economic data supports a more dovish stance of the Bank of Japan (BoJ) which could apply further pressure on the JPY.

EUR/JPY Levels to watch

Considering the daily chart, the EUR/JPY shows a bullish sentiment for the short term. The Relative Strength Index (RSI), positioned above its midline in positive territory with a northward slope, supports this view along with the positive indication from the Moving Average Convergence Divergence (MACD), which is displaying green bars, pointing towards a strengthening bullish trend. Also, the pair is above the 20,100,200-day SMAs, pointing towards the prevailing strength of the bulls in the larger context.

Support levels: 157.00, 156.00, 155.00.

Resistance levels: 158.00, 158.50, 159.00.

EUR/JPY Daily chart

EUR/JPY

Overview
Today last price	157.71
Today Daily Change	0.62
Today Daily Change %	0.39
Today daily open	157.09

Trends
Daily SMA20	155.99
Daily SMA50	154.78
Daily SMA100	150.87
Daily SMA200	146.82

Levels
Previous Daily High	157.74
Previous Daily Low	156.34
Previous Weekly High	157.5
Previous Weekly Low	155.11
Previous Monthly High	158.05
Previous Monthly Low	151.41
Daily Fibonacci 38.2%	157.21
Daily Fibonacci 61.8%	156.88
Daily Pivot Point S1	156.37
Daily Pivot Point S2	155.66
Daily Pivot Point S3	154.97
Daily Pivot Point R1	157.77
Daily Pivot Point R2	158.46
Daily Pivot Point R3	159.17

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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