EURJPY has been consolidating and correcting at the edge of 122.50 support area from where certain upward pressure is expected in the coming days.
The European Central Bank's latest economic forecast about temporary slowdown is still valid and its monetary policy stance appears to be appropriate. After the recent release of mixed economic data, the market sentiment has been a little undermined. Today, German Prelim GDP report is going to be published. It is expected to increase to 0.4% from the previous figure of 0.0%, while Flash GDP might probably be unchanged at 0.4%. Despite some positive changes in the eurozone, Praet, the ECB's chief economist, thinks that the eurozone needs to make joint efforts to maintain momentum in the coming days. There is no long-term initiative to reverse the economic slowdown yet. "A certain level of public risk sharing is necessary to create confidence in the overall financial system and thereby unlock the potential of private risk-sharing," Praet, the ECB's chief economist, said in a speech in Rome.
Moreover, Bank of Japan Governor Haruhiko Kuroda said on Tuesday he would consider additional easing without hesitation if consumer prices lost upward momentum. Kuroda, speaking in parliament, said the BOJ was committed to keeping short- and long-term rates low until at least the spring of 2020, adding rates could remain low beyond that period. Today, Japan's M2 Money Stock report was published. It reflected an increase to 2.6% from of 2.4%. The reading was expected to decrease to 2.3%. Prelim Machine Tools Orders report is not published yet. The previous figure was at -28.5%.
At the moment, the euro is likely to inch up on upbeat economic reports. It is highly likely that the euro might gain over the yen. The yen has recently strengthened due to the BOJ dovish slant.
Now let us look at the technical view. The price is currently residing at the edge of 122.50 support area. The price recently formed bullish divergence along the way which indicates certain bullish momentum. As the price remains above 122.50 support area with a daily close, the chances of bullish momentum is quite high with a target towards 123.50 and later towards 125.00 resistance area in the coming days.
