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EUR/JPY extends rally as traders weigh ECB rate-hike signals

Markets are also positioned ahead of Japan CPI and Jibun Bank flash PMI releases that could affect Yen sentiment.

Reported · Written up by our desk · Major Pairs

EUR/JPY extended its rally for a third straight day, with traders focused on how upcoming European Central Bank signals could shape next moves in the shared currency versus the Japanese Yen, according to FXStreet.

Bloomberg, citing sources, said ECB officials are ready to raise rates in September, and ECB President Christine Lagarde indicated inflation risks are tilted to the upside and growth to the downside, while emphasizing the bank would remain data-dependent and would not pre-commit to a specific rate path.

FXStreet noted the Yen weakened less than expected against the euro as investors also weighed the risk that the Bank of Japan could intervene in foreign exchange markets.

Ahead of further price action, FXStreet pointed to Japan’s inflation data and flash PMI updates, with Japan’s National CPI excluding fresh food expected to rise from 1.4% to 1.6% year over year, as well as Jibun Bank Flash PMIs expected to ease from 54.8 to 54.5. Technical levels highlighted by FXStreet included the April 30 high at 187.56, plus downside interest around Thursday’s low at 186.05, with subsequent support tied to moving-average areas.

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