This is a EURJPY  Technical Analysis on a Forex Blog.

EURJPY – On the H4 chart we see the EURJPY going sideways after reaching a high of 130.733. .

The 128.5 level is providing support at the moment and price is currently testing the 15 ema which is currently acting as resistance.

Price needs to trade above the 15 ema before we see more bulls coming in.

Yesterday, we had a more offered tone for the EURJPY but today the pair seems buoyant and it has been so since the release of the Bank of Japan’s policy decision and quarterly economic report.

The bulls seem intent right now to push this pair back up as we find more buyers at the 128.5 level.

The ECB is expected to announce their monetary policy decision later at 8.30 pm, Singapore time and they are expected to be hawkish.

The Bank of Japan on the other hand have scaled back CPI expectations and they are more or less leaving the monetary arrangements unchanged.

At the same time, they are also continuing with their unconventional monetary policy stance.

In other words, the BOJ is delivering kinda nothing new. There is no change and it seems they have not yet defeated their number one enemy, i.e. deflation and even delayed the timing of reaching their 2% inflation goal to Financial year 2019.

With no change in BOJs policy, we have these things unchanged:

  • Maintaining 10 year JGB Yield Target at around 0.00%
  • Maintaining Policy Balance Rate at -0.100%
  • 80 Trillion yen target purchasing to remain

We should also take note that the BOJ sees risk skewed to the downside. Now, how do we know this?

Just take a look at their GDP forecast for the next 3 years:

  • FY2017 – GDP forecast is 1.8%
  • FY2018 – GDP forecast is 1.4% … yikes!
  • FY2019 – GDP forecast is 0.7% …double yikes!

BOJ expects the Japanese economy to grow but at a moderate pace and they are not too optimistic enough to give us bigger numbers in their forecast.

The BOJ have also delayed the timing of reaching their 2% inflation goal to around FY2019 (which means around March 2020).

With expectations for inflation to remain on the weaker tone, we believe that the BOJ will not be increasing their rates anytime soon.

The above information have more or less summarized the situation for EURJPY.

We can expect this pair to remain buoyant and we would now look at strategies to buy this pair on weakness.

Do wait for ECB to make their announcement later tonight.

If Draghi remains hawkish, we can expect this pair to at least retest the last high at around the 130.7 price zone.

I hope that you have found this article useful. Do look out for more articles from us.

Trade well always and to your success!

Ardy Ismail

Pro Trader & Founder – 

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