The EURJPY was 0.5% higher on Tuesday despite the release of German inflation that showed a further drop below zero. September’s consumer prices fell -0.4%, which was well below the -0.1% drop analysts had expected. Similar data will be released for the Eurozone on Friday and a similar number would see further talk of ECB intervention in the currency rate after bank officials stated their concerns about the deflationary effects of recent Euro strength.
Tomorrow’s economic calendar will see industrial production and retail sales figures for Japan and this could move the EURJPY pair further towards key support or resistance. Friday’s inflation data will be the key driver as the market is keen to work out whether the ECB will introduce further stimulus measures, alongside currency intervention.
The Bank of Japan released its summary opinions this morning which showed that some members of the board wanted to see a review of the current policy following the economic damage from the coronavirus. Some stated a desire to see a new approach for pushing inflation higher towards the 2% target. A statement in the anonymous summary said: “As economic developments change rapidly, it’s becoming hard to foresee inflation reaching our target. It’s thus necessary to conduct again a comprehensive examination of our strategy for achieving the price goal”.
Japanese retail sales are expected to come in at -3.5% tomorrow, whilst the German version will be released later in the day with a 4.2% gain predicted. We may see some movement with discrepancies in that number, but the real volatility will likely come from Eurozone inflation on Friday.
EURJPY was almost 0.5% higher on the day and the market is correcting from the recent sell-off. The key resistance ahead will be around the 124.00 – 125.00 levels. This will determine whether we are seeing a bounce within the downtrend or another push higher. The ATFX Q4 Market Outlook is now available to download. You can find it here.
