The EUR/JPY pared some of its gains after a minor pullback. It hit a high of 157.23 and is currently trading around 157. The intraday outlook is bearish as long as the resistance of 160.25 holds.
The Bank of Japan (BoJ) recently raised its policy interest rate to 0.5% in January 2025, marking a change in its monetary policy. Markets expect at least one more 25 basis point rate increase in 2025, with scope for further more aggressive moves if economic conditions are favorable. Some BoJ policymakers suggest that rates need to rise further to keep real interest rates positive as economic difficulties ease. The BoJ sees inflation staying over 2% through fiscal 2026, supporting the case for additional rate increases based on continued wage growth. Forecasts among analysts differ, with some expecting the next increase in the second half of 2025 and others indicating a move earlier if data is supportive. S&P Global Ratings forecasts the policy rate to increase to 0.75% by the close of 2025, in a process of gradual monetary policy normalization.
Technical Analysis:
The EUR/JPY pair is trading below the 34,55 EMA and 200-4H EMA in the 4-hour chart.
- Near-Term Resistance: Around 157.50 a breakout here could lead to targets at 158/158.70/160.25/161/161.50/162/163/163.60/164/165/166.65/167.
- Immediate Support: At 155.80– if breached, the pair could fall to 155.49/155/154.40.
Indicator Analysis (4-hour chart): - CCI (50): Bearish
- Average Directional Movement Index: bearish
Overall, the indicators suggest a bearish trend
Trading Recommendation:
It is good to sell on rallies around 157.50 with stop loss at 158.20 for a TP of 155.49/155.
