EUR JPY

The EUR/JPY outlook is increasingly tuning bearish, but it must continue holding below the 160.00 handle to keep the bears happy. I reckon the pair is heading down to 155.00 in the coming days.

GBPUSD, EURJPY: Inflation indicators between the eurozone and the Japanese economy are due this week, following the jump in UK’s inflation rates next week, adding reversal potential to the dollar’s rally ahead of Trump’s presidency.

The Euro continued it’s Q4 descent against the US Dollar but it’s the recent build of bearish price action in EUR/JPY that’s of interest going into next week.

Against a backdrop of weakening economic data, looming tariffs from the US in 2025 and a struggling Chinese economy (bad for Eurozone exports), the euro outlook remains negative, putting pairs such as the EUR/USD and EUR/JPY into focus – the latter having just formed a bearish technical signal.

EUR/USD has taken a beating so far in Q4 but for the past week and the pair is testing the 1.0500 handle for a second time. For both Euro bears and Yen bulls, EUR/JPY could make for a more attractive argument for directional plays.

Yen weakness has hung around and USD/JPY and GBP/JPY both retain bullish appeal. But for those looking for Yen-strength, perhaps in anticipation of next month’s policy review from the BoJ, EUR/JPY could hold greater attraction.

USD/JPY has continued to rally up to fresh three-month-highs, but EUR/JPY has started to build bearish structure. Meanwhile a bull pennant has formed in GBP/JPY.

EUR/JPY and GBP/JPY on sitting on shaky ground. Momentum’s fading, and risks are skewing to the downside as we enter a quieter macro week.

Conditions for euro bears have been ripe for the past three weeks with renewed bets of an ECB cut alongside scaled-back bets of ECB easing. But given the depth of the selloff on EUR/USD, it could be vulnerable to a bounce unless a dovish cut is delivered.

EUR/JPY and GBP/JPY traders have already priced in the current projected path of interest rates from the ECB, BOE, and BOJ, so the main market driver moving forward will be how those expectations evolve.

The massive “yen carry trade” unwind was technically- and sentiment-driven, and could absolutely run further after pausing for a few weeks. EUR/JPY and GBP/JPY are in play.

While the euro has struggled, the Japanese yen continues to roar back higher. The strengthening yen is a reflection of tightening of bond yield spread between Japan and the rest of the world, after ballooning following the years of excessive expansionary monetary policy in Japan while the rest of the world pursued a sharp contractionary policy to combat surging inflation.

The ECB are likely to perform a widely telegraphed rate cut, odds of a Fed cut have increased and futures traders are becoming increasingly bullish on EUR/USD. Beyond the meeting, the path of least resistance could be higher.

AUD/JPY and EUR/JPY are sandwiched between range highs and uptrend support, meaning traders should be on alert for potential bearish and bullish breakout this week with big event risk in the United States and Europe approaching fast.

The long-awaited results from the Japan’s spring wage negotiations are winding down, and the results are generally what the BOJ wanted to see to exit its ultra-accommodative monetary policy. See the key levels to watch on USD/JPY, EUR/JPY, and GBP/JPY!

USD/JPY is consolidating while EUR/JPY and GBP/JPY remain in healthy uptrends.

Look no further than relative central bank interest rate expectations if you’re wondering what’s driving USD/JPY right now. The pair is moving in lockstep with US two-year Treasury note yields, running with a positive correlation of 0.96 on the daily over the past month.