EUR/JPY promising as Banking crisis wanes

The European Central Bank’s commitment to curbing inflation has led to a recovery in the euro’s prior decline, resulting in a bullish trend in EUR/JPY. Despite the lower interest rates in Europe compared to other regions, the ECB’s resolution to tackle high inflation levels suggests that more rate hikes are on the horizon. With strict EU regulations and regular stress testing, European banks are believed to be safer than their US counterparts.

Meanwhile, the Japanese yen has surrendered its gains from March when investors sought its safe-haven status during the US bank collapses. The new governor of the Bank of Japan, Ueda, has indicated that the ultra-loose policy will remain in place for now, as inflation is not as high as it is elsewhere. As a result, the yen is looking vulnerable once again.

While prices are currently testing immediate support at 146.70, with a bounce higher, the pair could trade at the 2022 high of 148.40. However, yesterday’s and today’s daily candles suggest the possibility of an even deeper pullback towards 145.80. As the bullish trend in EUR/JPY continues, it is advisable to look for opportunities to re-enter the uptrend after a pullback.