EUR/JPY is trending higher ahead of ECB and BOJ’s policy announcements!
Think today’s events will influence its hourly trend?
Before moving on, ICYMI, yesterday’s watchlist looked at EUR/AUD’s range resistance possibly holding ahead of ECB’s policy decision. Be sure to check out if it’s still a valid play!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
US housing starts declined 2% in June, building permits fall by 0.6% (vs. -0.7% in May)
Gov. Bailey: BOE to consider 50bps rate hike in August
Gov. Lowe: 2.5% is RBA’s “rough estimate of the neutral rate”China keeps benchmark lending rates unchanged, hopes for an economic rebound
Germany’s PPI inflation unexpectedly eases from 33.6% to 32.7% annual rate in June
UK inflation hits new 40-year high of 9.4% in June
UK producer prices rise the most in 42 years
Oil prices drop more than 1% ahead of U.S. inventory data
World shares hit three-week high on easing recession fears, resumption of gas flows from Russia to Europe
Dollar loses steam, euro on front foot as ECB meeting looms
Upcoming Potential Catalysts on the Forex Economic Calendar:
Canada’s CPI report at 12:30 pm GMT
U.S. existing home sales at 12:30 pm GMT
U.S. crude oil inventories at 2:30 pm GMT
AU NAB quarterly business confidence at 1:30 am GMT (Jul 21)
BOJ’s policy decision and presser out during the Asian session
Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️
What to Watch: EUR/JPY
In case you missed it, traders have taken a chill pill on their recession calls and gloomy predictions on what a 100bps Fed rate hike would mean to the global economy.Funds flowed out of safe-havens like USD and JPY and into “riskier” bets like AUD, NZD, and even EUR.
In fact, EUR/JPY has found support from a 1-hour trend line and almost hit 142.00 before EUR bears said “not today!” and sent the pair consolidating near 141.50.
Will we see a pullback to the trend line and 61.8% Fibonacci support zone? Or will EUR/JPY bulls push for new weekly highs today?
Keep close tabs on overall risk sentiment, which could make a U-turn during Canada’s CPI report, Uncle Sam’s oil inventory release, or any tension escalation between Russia and Europe.
A pullback to the trend line and 100 SMA area could attract EUR bulls ahead of ECB’s (possibly 50bps) interest rate hike.
Meanwhile, continued risk-taking or expectations of BOJ not making any policy changes could extend EUR/JPY’s upswing and push the pair to the 142.50 previous area of interest.