EUR/JPY

USD/JPY remains by far the most bullish of the major yen crosses...

It’s been a big week for global markets and it’s not over yet, with the Bank of Japan rate decision scheduled for later today.

With EUR/JPY and GBP/JPY testing critical support, price action over the next 30 hours will go a long way toward determining if the year-to-date trends extend or end from here...

EUR/USD has sold off for eight consecutive weeks and even EUR/JPY looks like it has potential to put in a turn. Will the European Central Bank rescue bulls with another rate hike this Thursday?

The USD/JPY breakout has continued even after an intervention threat, but both EUR/JPY and GBP/JPY have shown stall in those bullish trends over the past month, raising questions of reversal potential.

Asian equity markets were lower following China's trade data, yet US yields and the dollar pulled back to help AUD/USD hold above its cycle lows. I continue to suspect EUR/JPY has topped out on the daily chart, and today highlight a potential short setup beneath a resistance zone.

The combination of a verbal BOJ warning shot and relatively dovish comments from an ECB official saw EUR/JPY suffer its worst session in five weeks on Thursday. Given the increased odds that yen weakness is very near (or at) a turning point, I am going to stick my neck on the line and speculate that EUR/JPY has topped for now. We also take a look at the USD/JPY 1hour chart ahead of today’s NFP report.

The Japanese yen continues to weaken amidst quiet trade to start the week...

The publication of stronger European data again suggests that the eurozone and UK economies remain surprisingly resilient despite high levels of inflation.

During the press conference, Christine Lagarde seemed to be talking out of both sides of her mouth.

At the December BoJ meeting, traders were caught offsides. They won’t let that happen again!

..especially against currencies where the central bank is deemed to be slightly more dovish than the ECB

…But in which direction?

The ECB has indicated that further normalisation of interest rates “will be appropriate.”

If the ECB delivers a 50 bp hike, this will further increase the disparity between Japan and Eurozone monetary policies, supporting the EUR/JPY.

Will EUR/JPY continue moving higher? The next directional move for the pair could depend of the outcome of these meetings on Thursday!

In addition to EUR/USD moving lower, EUR/JPY could continue lower as well, as the Yen is also considered a safe haven currency.