The Euro reached its highest level against the Japanese Yen since 2008, touching 165.62 yen, amid anticipation of policy updates from the upcoming Bank of Japan (BOJ) meeting.
This significant movement comes as the yen weakened due to expectations that the BOJ will maintain a gradual approach to tightening monetary policy.
Meanwhile, the Dollar strengthened significantly against the Yen, hitting a peak of 154.87, a level last seen in 1990. This upward movement brings the USD/JPY pair close to the 155 yen mark, considered a critical trigger point for potential intervention by Japanese authorities.
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Economic indicators and policy movements
The Euro’s ascent was fueled by positive economic indicators from the Eurozone, where business activity has expanded at its fastest rate in almost a year, driven by a strong recovery in the services sector.
Further adding to the currency dynamics, the Euro demonstrated resilience against the Dollar. The European currency climbed as much as 0.39% against the USD to $1.0695 and briefly reached its three-month high against the British Pound at 86.4 pence, following strong German PMI data.
Concurrently, the Dollar’s ascent to near three-decade highs against the Yen underscores the divergent monetary policies between the U.S. and Japan. As the Federal Reserve signals a more aggressive stance in managing inflation, the BOJ remains cautious, adding pressure on the Yen.
In contrast, the Pound has struggled, remaining near its weakest levels in months amid dovish comments from Bank of England policymakers. They anticipate a return to the 2% inflation target, possibly influencing a more cautious approach to interest rate adjustments this summer.
Last week, Japanese Finance Minister Shunichi Suzuki signaled a robust stance against excessive movements in the Yen’s value, setting the stage for potential action, although market analysts remain skeptical about the timing of such interventions given the proximity to the BOJ’s policy meeting.
EUR/JPY technical analysis
Over the past week, the EUR/JPY pair has shown a rising trend, closing at 165.416 on April 23rd from a low of 163.210 on April 15th, reflecting strong bullish momentum. This uptrend is supported by higher lows over the month, indicating sustained buying interest. However, with the Relative Strength Index (RSI) nearing 68, the pair is approaching overbought territory, suggesting potential for a pullback or consolidation in the near term.
Over the last month, the pair has generally moved upwards from around 160 in early March, indicating a bullish monthly trend. Traders should monitor for resistance around the recent high of 165.639 and consider support levels near 163 as pivotal points for future price movements.
As global central banks navigate shifting economic landscapes, with the European Central Bank and the U.S. Federal Reserve also on the radar for potential rate cuts later this year, the currency markets remain a focal point for investors.
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