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22.01.202512:36 Forex Analysis & Reviews: EUR/JPY: What Are the Growth Prospects for the EUR/JPY Pair Going Forward?

Relevance up to 05:00 2025-01-23 UTC--5

The EUR/JPY pair has been drawing buyers for the fourth consecutive day, continuing its recovery from the 159.65 level, where last week's monthly low was recorded.

The intraday positive trend is lifting spot prices, setting a new weekly high amid selling pressure on the Japanese yen.Global risk sentiment is bolstered by the ceasefire agreement between Israel and Hamas, along with hopes that U.S. President Donald Trump may ease restrictions on Russia in exchange for a peace deal in Ukraine. Additionally, the lack of details in Trump's proposed trade tariffs fuels investors' appetite for riskier assets, reducing demand for the safe-haven yen and supporting the rise of the EUR/JPY pair.

Exchange Rates 22.01.2025 analysis

However, rising expectations for a Bank of Japan rate hike on Friday may limit significant yen depreciation.The modest strengthening of the U.S. dollar and Trump's threats to impose tariffs on the European Union, coupled with expectations that the European Central Bank (ECB) may further lower borrowing costs, also put pressure on the euro and could constrain further gains for EUR/JPY.

Given the fundamental backdrop and recent struggles near the 200-day Simple Moving Average (SMA), traders looking to bet on further pair growth should proceed with caution. It is advisable to wait for sustained buying momentum before entering long positions. Later today, speeches by ECB President Christine Lagarde may provide additional market drivers, though the key focus will remain on the pivotal monetary policy meeting of the Bank of Japan.

From a technical perspective, the Relative Strength Index (RSI) on the daily chart is starting to gain positive momentum, suggesting that further pair growth could be on the horizon.

Exchange Rates 22.01.2025 analysis

The yen has been strongest against the New Zealand dollar.

Exchange Rates 22.01.2025 analysis

*Analiza tržišta koja se ovde nalazi namenjena je boljem razumevanju tržišta i ne pruža instrukcije za vršenje trgovanja.

Irina Yanina,
Analytical expert of InstaSpot
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