The EUR/JPY market is currently bearish.
The key drivers influencing this trend include:
- Recent monetary policy from the Bank of Japan (BOJ), which raised interest rates to combat inflation, making the yen more attractive.
- The European Central Bank (ECB) has maintained a cautious stance, with concerns over a strong euro potentially slowing inflation, which may weigh on the euro’s strength.
- Japan's improving business sentiment may support economic resilience, contrasting with mixed economic signals from the Eurozone.
In the near term, the EUR/JPY pair is expected to continue trading within a defined range, likely exhibiting stable fluctuations from current levels.
An upside risk could arise if the ECB shifts its policy to address inflation concerns more aggressively, potentially strengthening the euro. Conversely, a downside risk is present if geopolitical tensions or poor economic data further destabilize the Eurozone, leading to higher volatility in the EUR/JPY pair.