EURJPY prices could trade higher after the ECB commented on hiking rates beyond the current 4%. The BoJ are happy leaving rates at -0.1% and the contrast in policies could drive prices towards 159.00.
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EURJPY: Price Could Trade HIgher As ECB Looks To Hike Rates Further
The EURJPY currency pair has been gaining significant attention among traders and investors due to the contrasting stance of the European Central Bank (ECB) and the Bank of Japan (BoJ) regarding interest rates. While ECB President Christine Lagarde continues to drive the narrative for European interest rates to rise further from the current 4.00%, BoJ Governor Ueda stated that Japan’s central bank is content to maintain rates at -0.1%. This stark contrast in central bank ideas has the potential to propel EURJPY towards the key resistance level of 159.00. In this blog post, we will delve into the reasons behind these opposing views and discuss the potential implications for the EURJPY exchange rate.
The divergence in interest rate expectations between the ECB and the BoJ has a significant impact on the EURJPY exchange rate. As the ECB signals its intention to raise interest rates, it attracts foreign investors seeking higher yields on their investments in Euro-denominated assets. This increased demand for the euro pushes up its value relative to the Japanese yen, thus driving the EURJPY exchange rate higher.
Additionally, the prospect of higher interest rates in the Eurozone enhances the attractiveness of the euro as an investment currency. It may prompt investors to shift their capital from low-yielding Japanese assets to higher-yielding Eurozone assets, further bolstering the EURJPY pair.
From a technical standpoint, the EURJPY chart shows a bullish bias as the currency pair continues to exhibit upward momentum. The resistance level around 159.00 has been a significant hurdle for EURJPY in the past, but given the contrast in central bank ideas, there is a possibility that the pair could break through this resistance level. Traders and investors closely monitor price action near this resistance zone, as a sustained break above 159.00 could signal a bullish continuation and potentially open the door for further upside gains.
The price on the chart has traded through multiple technical levels and some observations included:
- Price could reach the resistance of 159.00 if the uptrend remains.
- Support sits at 157.00, if price retests this level it could see buyers re-enter the trend again.
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