What is expected in BOJ meeting
Bank Of Japan next meeting on Thursday on interest rate decision. Many countries are aggressively increasing the rates to put brakes on inflation. The BOJ is unlikely to do anything, as inflation rate sits at 2.5%.
EUR/JPY had been moving higher since 7th of March 2022. The pair began moving higher in an upward slop channel as inflation began to rise in Europe. EUR/JPY pulled back because Euro got hit across the board. On the 5th of July, the pair broke below the upward sloping channel and pulled back to 38.2% Fibonacci retracement level from the lows of March 7th to highs of June 28th,as well as horizontal support, near 136.70. The support held on and EUR/JPY has gone bid for the last 5 days.
EUR/Jpy is currently up against resistance of 61.8% Fibonacci retracement level from the June 28th highs to July 8th lows near 141.44. This is also the top trendline of a short-term channel the pair has been in since July 12th . If price breaks above the channel, the next resistance level is at the July 5th highs of 142.37.
EUR/JPY can move up to test the June 28th highs at 144.28. The RSI is in overbought territory, an indication that the pair may be ready for a pullback. If EUR/JPY does move lower, the first support is the bottom of the channel trendline near 140.05. Below there, horizontal support sits at 138.80, then the lows from July 8th near 136.86.
ECB also has a meeting on Thursday and there is possibility of a 50bps rate hike. The interest rate differentials between ECB and BOJ helped EUR/JPY go bid. Will is continue moving higher ? The next direction move for the pair depends on the outcome of these meetings on Thursday.