- The EUR/JPY remains steady as Japan takes a measured approach, while the EU braces for heightened tensions with the US.
- The ECB’s upcoming rate decision is likely to influence the EUR/JPY as well.
- The EUR/JPY has surpassed a moving average resistance level close to 172.00.
The Euro (EUR) is trading in a narrower range against the Japanese Yen (JPY) today, with trade tensions involving the US and its key partners taking center stage.
Currently, the EUR/JPY is hovering around the 172.00 mark as discussions unfold between the EU and the US, as well as between the US and Japan.
As US tariff deadlines loom, the EU and Japan are on alert
Japan and the European Union are bracing for potential tariff increases on exports to the US, set to kick in on August 1st, as negotiations reach a critical stage.
Concerns about escalating trade disputes persist, particularly impacting export-dependent economies like Japan and the eurozone.
Ryosei Akazawa, Japan’s top trade negotiator, is in Washington for discussions; this is the eighth round of talks focusing on existing trade issues and the prevention of new tariffs.
Meanwhile, EU officials are holding consultations from Brussels, although no face-to-face meetings with senior trade representatives from the US have been confirmed yet.
The outcomes from meetings scheduled for July 22nd-23rd are crucial. If these talks fall through, the US might proceed with a proposed 30% tariff on EU products.
In retaliation, the European Union is preparing countermeasures aimed at US goods, particularly in the digital services and aerospace sectors.
ECB’s upcoming rate decision adds to EUR/JPY dynamics
The Euro also faces potential volatility ahead of the European Central Bank’s (ECB) rate decision to be announced Thursday.
While immediate policy changes are not anticipated, the accompanying monetary statement and press conference could shed light on the central bank’s views regarding inflation risks, growth, and future policy tweaks.
For EUR/JPY, shifts in tone, particularly those leaning towards hawkish stances, can influence rate differentials and impact short-term strategies.
EUR/JPY surpasses moving average resistance
From a technical perspective, EUR/JPY is positioned within an integration phase after retreating from a year-to-date high of 173.25 reached last week. It is currently trading above the 10-day Simple Moving Average (SMA) support around 170.90, facing immediate resistance at 172.94 just below the psychological barrier of 173.00.
A confirmed breakout above this threshold could lead to a move toward 173.50, with resistance near the July 2024 peak of 175.43.
On the downside, initial support is around 170.50. A more substantial pullback might attract buyers in the 169.70-170.00 range, where the 20-day SMA and earlier lows converge.
The relative strength index (RSI) is hovering close to 64, indicating a retreat from overbought levels, which might suggest that bullish momentum is fading.
