The euro-yen cross continues to trend higher as monetary policy divergence between the European Central Bank (ECB) and the Bank of Japan (BoJ) deepens. With the ECB moving cautiously toward easing and the BoJ remaining hesitant to tighten aggressively, EURJPY remains supported by wide interest rate differentials and stable eurozone economic sentiment.
While the ECB delivered a widely anticipated rate cut in June, policymakers have signaled that further easing will be gradual. Recent Eurozone inflation prints—particularly in services—have remained sticky, prompting a more guarded tone from ECB officials. President Christine Lagarde recently emphasized the need to assess incoming data before committing to additional cuts, helping the euro hold firm.
The BoJ has begun stepping away from ultra-loose policy in Japan by lifting short-term rates and exiting yield curve control. However, the central bank has maintained a cautious approach, with inflation expectations still fragile and domestic consumption under pressure. The lack of follow-through tightening has pressured the yen, particularly against currencies backed by more assertive central banks.
EURJPY has remained comfortably above the 170.00 handle, reflecting both the ECB’s slow approach to cuts and the BoJ’s reluctance to normalize policy aggressively. Risk sentiment has also played a role; equity markets remain buoyant, reducing safe-haven demand for the yen.
Technical indicators show bullish momentum intact, with the pair holding within an ascending channel on the daily chart. Resistance lies near 173.50, with key support seen at 169.20. A break below this level could open the door to a deeper retracement, especially if global risk appetite wanes or Japan surprises with a policy shift.
Traders should monitor eurozone inflation data, ECB speeches, and Japan’s wage and inflation numbers. Any deviation from current expectations could trigger sharp moves in EURJPY.
Key Data to Watch:
- Eurozone CPI and PMI figures
- Japan’s national CPI and household spending
- Policy commentary from ECB and BoJ officials
Strategy Insight: EURJPY remains supported by the wide ECB-BoJ policy gap. Unless the BoJ signals a hawkish pivot or the eurozone experiences a sharp downturn, the path of least resistance may continue to favor euro strength over the yen.
EURJPY – H4 Timeframe
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On the EURJPY 4-hour timeframe chart, we see the price approaching a key demand zone, further confluence from the trendline support and the bullish break of structure. The sentiment remains bullish unless the price can break below the support trendline.
Direction: Bullish
Target- 169.840
Invalidation- 167.771
CONCLUSION
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