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EUR/JPY strengthens near 185.20 as JPY weakens on softer Japan growth
The move comes after Japan’s Q2 GDP grew 0.3% versus a 0.5% forecast, with traders also watching Friday’s Japan CPI release.
EUR/JPY was stronger in early European trade, hovering around 185.20, as the Japanese yen weakened against the euro. FXStreet attributes the yen softness to disappointing Japanese GDP data, which came in below market expectations.
Japan’s second-quarter growth expanded 0.3%, versus a 0.5% forecast and a prior 0.5% growth reading. Traders are also looking ahead to Friday’s Japan National Consumer Price Index inflation report.
Market pricing suggests the Bank of Japan could be more hawkish than previously expected, with Reuters cited as saying overnight index swaps imply about an 80% chance of a BoJ rate hike at the next policy meeting. FXStreet also notes the uptrend remains intact in technical terms, with the pair holding above its 100-day simple moving average and facing resistance near the June 17 high of 186.32.
Further upside levels are identified near the upper Bollinger Band around 187.50, while support is seen around 185.10 and the Bollinger middle band near 184.00. A deeper pullback would next test the August 10 low at 182.70, before 180.55, where stronger buying interest is expected if the broader uptrend is challenged.