During today’s European session, the EUR/JPY pair is showing a bullish trend, targeting the key resistance level of 157.70. This upward movement is significant as it challenges a long-standing falling resistance line. Interestingly, this bullish drive is happening despite weak economic indicators from both Japan and Germany.
The Euro’s strength in the face of lackluster German inflation data and sluggish Treasury bond yields is noteworthy. Despite the expected inflation figures closely matching the forecasts, with a YoY rate of 6.5% for the Harmonized Index of Consumer Prices (HICP) and 6.2% for the Consumer Price Index (CPI), the EUR/JPY pair continues to rise. This suggests a prevailing bearish sentiment towards the European Central Bank (ECB).
However, the driving force behind the pair’s ascent could be linked to the evolving monetary policy of the Bank of Japan (BoJ), supported by recent wage statistics from Tokyo. While Japan’s Labor Cash Earnings for June exceeded expectations, real wages continued to decline for the 15th consecutive month, dropping by 1.6% YoY. This decline aligns with the dovish stance surrounding the BoJ.
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