The EURJPY currency pair, currently at 156.047, is experiencing a downward trend towards the 155.00 level due to investor caution before the ECB-BoJ interest rate policy announcement.

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• EUR/JPY is declining towards 155.00 as investors turn cautious ahead of the ECB-BoJ interest rate policy.

The pair currently trades last at 156.047.

The previous day high was 0.6756 while the previous day low was 0.6715. The daily 38.2% Fib levels comes at 0.674, expected to provide support. Similarly, the daily 61.8% fib level is at 0.6731, expected to provide support.

The EUR/JPY pair has come out of the woods and is declining towards the immediate support of 155.00 in the European session. The cross is expected to remain volatile ahead of the interest rate policies by the European Central Bank (ECB) and the Bank of Japan (BoJ), which are scheduled for July 27 and July 28 respectively.

Inflationary pressures in Eurozone have softened from its peak of 10.6% to 5.5% reading in June but are still far from the desired rate of 2%. Therefore, ECB President Christine Lagarde would raise interest rates by 25 basis points (bps) to 4.25%. An interest rate hike in July seems necessary for the ECB, knowing the fact that wages are still elevated and global oil prices are recovering after a long time.

A recovery in the oil prices would propel headline inflation, therefore, making an interest rate hike in September a possibility.

Meanwhile, firms in Eurozone are facing the wrath of higher interest rates by the ECB. In its quarterly survey of 158 big banks, the European Central Bank (ECB) highlighted that “firms’ demand for credit dropped to lowest since the survey started in 2003.”

On the Japanese Yen front, BoJ Governor Kazuo Ueda is expected to continue its dovish policy stance as inflation will take time in sustaining confidently above 2%. In spite of rising wages due to changes in corporate behavior, BoJ needs more time for a sustained move above 2%.

The Japanese government is out with its outlook on the country’s inflation, noting that inflation is seen staying around 0.7% in the longer term. “Wages are projected to increase by 2.5% in FY24, following a 2.6% jump in FY23,” the government said.

Technical Levels: Supports and Resistances

EURJPY currently trading at 0.6773 at the time of writing. Pair opened at 0.6739 and is trading with a change of 0.5 % .

The pair remains strongly bullish on the daily timeframe. It trades above its 20 SMA @ 0.6721, 50 SMA 0.6692, 100 SMA @ 0.6687 and 200 SMA @ 0.672.

The previous day high was 0.6756 while the previous day low was 0.6715. The daily 38.2% Fib levels comes at 0.674, expected to provide support. Similarly, the daily 61.8% fib level is at 0.6731, expected to provide support.

Note the levels of interest below:

• Pivot support is noted at 0.6718, 0.6696, 0.6676
• Pivot resistance is noted at 0.6759, 0.6778, 0.68

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