- EUR/JPY rallies over 50 pips from the daily low amid some repositioning ahead of the ECB.
- The BoJ’s dovish outlook continues to undermine the JPY and acts as a tailwind for the cross.
- Intervention fears could limit the JPY losses and cap gains ahead of the central bank event risk.
The EUR/JPY cross attracts some dip-buying near the 164.15-164.10 area on Thursday and climbs to a fresh daily peak during the first half of the European session. Spot prices currently trade around the 164.65-164.70 region and for now, seem to have snapped a two-day losing streak to the weekly low touched on Wednesday.
The Japanese Yen (JPY) continues to be undermined by the Bank of Japan's (BoJ) cautious approach and uncertain outlook for future rate hikes. Apart from this, some repositioning trade ahead of the key central bank event risk – the highly-anticipated European Central Bank (ECB) meeting – acts as a tailwind for the EUR/JPY cross. That said, a combination of factors might hold back bulls from placing aggressive bets and cap the upside.
A flurry of verbal warnings from Japanese officials that they would intervene in the markets to address any excessive falls in the domestic currency, along with the cautious market mood, could help limit losses for the safe-haven JPY. Apart from this, bets that the ECB will start cutting interest rates in June, amid a faster-than-anticipated fall in the Eurozone inflation, should contribute to keeping a lid on the EUR/JPY cross.
Hence, the market focus will remain glued to fresh economic projections, which, along with ECB President Christine Lagarde's comments at the post-meeting press conference, will be looked upon for cues about the timing of the first rate cut. This, in turn, will influence the shared currency in the near term and provide a fresh directional impetus to the EUR/JPY cross. Nevertheless, the fundamental backdrop warrants caution for bullish traders.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD stays near 1.0400 in thin holiday trading
EUR/USD trades with mild losses near 1.0400 on Tuesday. The expectation that the US Federal Reserve will deliver fewer rate cuts in 2025 provides some support for the US Dollar. Trading volumes are likely to remain low heading into the Christmas break.
GBP/USD struggles to find direction, holds steady near 1.2550
GBP/USD consolidates in a range at around 1.2550 on Tuesday after closing in negative territory on Monday. The US Dollar preserves its strength and makes it difficult for the pair to gain traction as trading conditions thin out on Christmas Eve.
Gold holds above $2,600, bulls non-committed on hawkish Fed outlook
Gold trades in a narrow channel above $2,600 on Tuesday, albeit lacking strong follow-through buying. Geopolitical tensions and trade war fears lend support to the safe-haven XAU/USD, while the Fed’s hawkish shift acts as a tailwind for the USD and caps the precious metal.
IRS says crypto staking should be taxed in response to lawsuit
In a filing on Monday, the US International Revenue Service stated that the rewards gotten from staking cryptocurrencies should be taxed, responding to a lawsuit from couple Joshua and Jessica Jarrett.
2025 outlook: What is next for developed economies and currencies?
As the door closes in 2024, and while the year feels like it has passed in the blink of an eye, a lot has happened. If I had to summarise it all in four words, it would be: ‘a year of surprises’.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.