The EURJPY Exchange rate is looking to hold onto its bull trend ahead of European consumer price data on Tuesday.
EURJPY – 4H Chart
The price of the EURJPY has some support ahead of the 180.00 level, but the bigger target could be the November high at 178.80 if further weakness develops.
Consumer price data for the eurozone comes at 5pm HKT on Tuesday, and EUR v JPY traders are expecting core inflation to tick higher to 2.5% annually from 2.4%. The European Central Bank’s preferred indicator is expected to come in at 2.1% and analysts expect that to secure a hold on interest rate levels from the central bank’s policymakers, due to it being in line with the bank’s 2% target.
If there’s any bias within the ECB at present, it might be toward looking for upward pressure on prices. The bank’s Vice President, Luis de Guindos, told Bloomberg Television in late November that “the risk of undershooting is limited, in my view”.
Comments from the ECB on stock prices said, “Parallels with the early 2000s are fuelling concerns that an asset price bubble may be building, but the current high valuations appear to be underpinned by exceptionally robust earnings performance”.
The single currency was showing some weakness after manufacturing activity slipped back into contraction territory in November. Weaker demand forced companies to cut jobs at the fastest pace in seven months, a private survey showed.
The HCOB Eurozone Manufacturing Purchasing Managers’ Index dropped to 49.6 in November from 50.0 in October, marking a five-month low. New orders declined after stagnating in October, while export orders fell for the fifth consecutive month, highlighting challenges in international markets due to a higher euro.
The Japanese yen is showing some strength against the euro after recent weakness against global currencies on stimulus plans. Japan’s Cabinet has recently approved a 21.3 trillion yen ($135.4 billion) stimulus package to help boost the economy through expansionary government spending. New Prime Minister Sanae Takaichi promised to increase spending despite concerns over the country’s debt pile.
Traders watching the Japanese yen also have to factor in the price of long-term Japanese bond yields.
