EURJPY has been on a sharp downward path since July. Diverging policy directions are creating significant pressure on the currency. The ECB is in a rate-cutting cycle, while the BOJ is attempting to normalize its policy in response to newly emerging inflation. Additionally, the sluggish economy and political challenges in the Eurozone have not been helpful.
Today’s ECB meeting and its decisions will be closely watched by EURJPY traders. The ECB is expected to cut rates by another 25 basis points, a move that has already been priced in by the markets. The key point of focus at today’s meeting will be the updated economic forecasts. Lower-than-expected inflation and growth data could prompt the ECB to revise its forecasts downward. Another factor to watch is any potential hints about the future rate-cutting path, though Lagarde tends to provide as little hints as possible to maintain flexibility in the ECB’s decision-making.
(EURJPY Daily Chart)
EURJPY remains in an uptrend despite the recent sharp drop. It has returned to its original trend channel and is now testing the midpoint of that channel. Nearly a year ago, the pair broke above this channel on strong demand, driven by high EU rates. The 155-155.30 zone now serves as a key support level. If the downward movement resumes after the ECB meeting and this support zone breaks, the decline could extend to 150 in the coming weeks, aligning with the lower boundary of the trend channel. However, for now, the support is holding.
