EUR/JPY recovered from the loss made after the BOJ Governor's speech. It hit an intraday low of 166.97 and is currently trading around 167.31. Intraday outlook is bullish as long as the support of 165.95 holds.
In his speech last week, Governor Ueda emphasized the BOJ's (BOJ) dedication to maintaining its short-term policy interest rate at 0.5% to support the Japanese economy while remaining data-dependent for future adjustments. Due to food prices and wage growth, core inflation is still above the 2% target, but it was highlighted that rate hikes would need to be sustainable with wages. In response to JGB market instability, Ueda has suggested reducing bond purchases gradually and cautiously from 2026 onwards, with advanced communication to maintain order. He acknowledged the BOJ's worries about yen instability but reiterated its commitment to improving domestic conditions and meeting international risk standards.
Technical Analysis:
The EUR/JPY pair is trading above 55 EMA, 200, and 365-H EMA on the 4-hour chart.
- Near-Term Resistance: Around 167.67 a breakout here could lead to targets at 168/170.
- Immediate Support: At 166.60 if breached, the pair could fall to 165.95/165.55/164.50/164.
Indicator Analysis 4-hour chart):
- CCI (50): Bullish
- Average Directional Movement Index: Bullish
Overall, the indicators suggest bullish trend
Trading Recommendation:
It is good to buy on dips around 166.78-80 with stop loss at 165.95 for a TP of 170.
