The EUR/JPY pair recently rose. It was residing at the 122.50 area. The yen exhibited strength while the euro weakened.
The euro lost momentum after the European Commission has cut its euro-area growth and inflation forecast for next year as trade tensions and policy uncertainty are weighing on the region. In its quarterly forecasts, the EU's executive arm trimmed its 2020 euro-area GDP projection to 1.4% from 1.5% amid what it said were increased downside risks. On inflation, both this year and next were lowered modestly to 1.3%. The ECB aims for inflation of just below 2% over the medium term. Recently, ECB officials indicated that they're willing to cut interest rates further and possibly even restart asset purchases if needed. Germany and Italy are projected to have the lowest growth rates in the euro area this year, dragging down the outlook for the rest of the bloc.
The Final CPI data for Germany remained unchanged as expected at 0.3%. The French Final CPI report will be published soon. The reading is also expected to be unchanged at 0.2%.
Furthermore, the Bank of Japan's focus on keeping the yen weak and bolstering stock prices has made executives complacent and hurt corporate competitiveness. According to Akira Kondoh, Years of aggressive monetary easing under the BOJ's Kuroda has helped weaken the yen to the benefit of exporters. But that has allowed companies with low productivity to stay alive. The US-China trade war and slowing global demand have heightened market expectations for a Fed rate cut this month which has put the BOJ under pressure to ease at its July 29-30 rate review, to avoid narrowing US-Japan rate differentials from pushing up the yen versus the dollar.
Japan's Tertiary Industry Activity report showed a decrease to -0.2% from the previous positive value of 0.8% which was expected to be at -0.1%. The Industrial Production report will be published tomorrow. The figure is expected to be unchanged.
Now let us look at the technical view. The price is currently correcting below 122.50 area. If it breaks below the trend line support i.e. at 121.50 area with an intraday close, the price is expected to push lower towards 119.00 and 120.00 support area. The dynamic level of 20 EMA restrains the price from its rise.
