EUR/JPY Reverses Two-Day Slide, Yet Bearish Outlook Lingers Below Key EMA
The EUR/JPY cross shows signs of recovery during the early European session, breaking a two-day losing streak, but the bearish sentiment persists as the cross remains below the crucial Exponential Moving Average (EMA) on the daily chart. Currently trading at 156.06, marking a modest 0.16% gain for the day.
Concerns arise as falling inflation in the Eurozone could prompt the European Central Bank (ECB) to consider interest rate cuts in the second quarter of 2024. Traders intensify their expectations for a rate cut following the dip in eurozone inflation to 2.4% in November, just above the ECB’s target of 2% and significantly down from its peak of over 10% a year earlier.
On the Japanese Yen front, the outlook remains influenced by the speculation that the Bank of Japan (BoJ) might exit its ultra-loose policy in the first half of 2024. BoJ Governor Kazuo Ueda emphasized the need for a virtuous cycle of wage and price for policy normalization during a December 19 press conference.
Looking forward, trader focus shifts to the Eurozone HCOB Manufacturing PMI for December, while Wednesday brings the German Unemployment report. Thursday’s highlights include the Japanese Jibun Bank Manufacturing PMI and the German Consumer Price Index (CPI).