EUR/JPY trades below 159.00, JPY still vulnerable

EUR/JPY traded with losses for a consecutive day, and fell near the 158.60 area.
The BoJ remains very dovish and weakens the Yen. Eyes on GDP data on Tuesday.
Eurozone will release Q2 GDP data on Wednesday.

At the start of the week, the EUR/JPY traded with mild losses below 159.00. Both currencies traded weakly against their rivals on a quiet Monday ahead of the Gross Domestic Product (GDP) data from Japan and the Eurozone this week. On the JPY’s side, the USD/JPY broke through the 145.00 key level for the first time since November 2022, but there are still no signs of intervention from the local authorities to limit Yen’s losses.

Economic activity figures will be the week’s highlight for the pair. On the Japanese side, on Tuesday, the Q2 Gross Domestic Product (GDP) figures will be released and are expected to have grown at an annualised pace of 3.1%. That being said, there are no signs from the Bank of Japan (BoJ) to pivot its dovish monetary policy or to intervene in the markets to control the JPY’s downfall, which could pave the way for further downside for the pair.

On the European side, the Preliminary GDP figures from Q2 from the Euro area are expected to come in at 0.6% YoY matching the previous quarterly figures. In addition, inflation data will be released from the Eurozone and both sets of data will help investors to model their expectations towards the next European Central Bank (ECB) decisions.

EUR/JPY Levels to watch

The EUR/JPY suggests a neutral to bearish technical outlook on the daily chart as bullish momentum wanes. Having turned flat in positive territory, the Relative Strength Index (RSI) suggests a potential market equilibrium with balanced buying and selling pressure, while the Moving Average Convergence (MACD) histogram prints stagnant green bars. On the other hand, the pair is above the 20,100,200-day Simple Moving Average (SMA), indicating that the buyers are commanding the broader perspective.

Support levels: 158.00, 157.00, 156.00.

Resistance levels: 159.00, 160.00, 161.00.