The EURJPY currency pair experienced a significant correction from 156.253 to 156.00 due to the market becoming exceedingly cautious.

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• EUR/JPY corrects sharply to 156.00 as the market mood turns extremely cautious.

The pair currently trades last at 156.253.

The previous day high was 157.5 while the previous day low was 156.26. The daily 38.2% Fib levels comes at 156.73, expected to provide resistance. Similarly, the daily 61.8% fib level is at 157.03, expected to provide resistance.

The EUR/JPY pair drops swiftly near 156.00 as the Eurostat reports that June’s Producer Price Index (PPI) deflated in June beyond expectations. The monthly PPI contracted by 0.4% while investors were anticipating a deflation at a pace of 0.2%. It seems that producers are passing on the impact of the decline in input prices to end consumers.

Going forward, investors will focus on German Factory Orders data for June. Monthly factory orders are seen contracting by 2.0% from May’s expansion pace of 6.4%. It seems that the manufacturing sector is feeling the heat of an aggressive rate-tightening cycle by the European Central Bank (ECB).

Apart from the German factory orders, Eurozone Retail Sales for June will also hog the limelight. Monthly consumer spending momentum is seen expanding at a pace of 0.2% vs. a stagnant performance being reported in May. Annual Retail Sales are expected to deliver a decline in contraction to 1.7%

ECB President Christine Lagarde raised interest rates by 25 basis points (bps) last week to 4.25% and commented that the central bank will remain dependent on incoming data for further policy action. Inflationary pressures are almost three times the desired rate of 2%, therefore, further policy-tightening seems warranted.

Meanwhile, the Japanese Yen is performing better against the Euro due to a cautious market mood and a strong message delivered by the Bank of Japan (BoJ) that it is considering an exit from the ultra-dovish policy stance. In the monetary policy meeting announced last week, the BoJ provided more flexibility to the Yield Curve Control (YCC).

Technical Levels: Supports and Resistances

EURJPY currently trading at 156.06 at the time of writing. Pair opened at 156.77 and is trading with a change of -0.45 % .

The pair remains strongly bullish on the daily timeframe. It trades above its 20 SMA @ 155.83, 50 SMA 154.29, 100 SMA @ 150.27 and 200 SMA @ 146.62.

The previous day high was 157.5 while the previous day low was 156.26. The daily 38.2% Fib levels comes at 156.73, expected to provide resistance. Similarly, the daily 61.8% fib level is at 157.03, expected to provide resistance.

Note the levels of interest below:

• Pivot support is noted at 156.18, 155.6, 154.94
• Pivot resistance is noted at 157.43, 158.09, 158.68

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