Intervention or not, euro-yen might still slow down

The euro has made gains against the yen in June, with the Japanese currency losing out across the board over the last several months as the Bank of Japan (‘the BoJ’) has been more cautious than expected in starting to tighten policy. Fresh verbal interventions by the government of Japan continue but so far haven’t had a significant impact on markets.

The current area just below ¥172 is the EURJPY’s highest price since the introduction of the euro in 2002, so it’s difficult to project the next possible resistance apart from psychological areas. It’s also questionable whether gains will continue at this pace due to a clear overbought signal from the slow stochastic and the lack of any significant retracement since May.

Many traders are expecting a material intervention – i.e. not just more headlines saying ‘we’ll do something when we need to’ – by the BoJ within the next few weeks. If this occurs, which is not guaranteed, there might be a similar situation to late April and early May when volatility massively increased around the BoJ’s meeting. The 50 SMA from Bands seems to be a strong dynamic support given that it’s been tested unsuccessfully four times since 12 April.

This is my personal opinion which does not represent the opinion of Exness. This is not a recommendation to trade.