The EURJPY exchange rate is increasing and could test resistance after tomorrow’s German inflation.
EURJPY – Daily Chart
EURJPY trades at the 143.72 level and has resistance ahead of 146.
German inflation will be released tomorrow, expected at 7.3% from 8.7%. That would be a sharp drop, and the number could miss expectations.
The current path is higher, but traders should look for a stubborn inflation number like the recent British release, which remained above 10%.
A higher number would pressure the European Central Bank over interest rates. The bank policymakers have attempted to slow the pace of rate hikes after recent banking instability.
The American Enterprise Institute recently wrote:
“Lagarde has to raise interest rates at a time when governments in the euro zone’s economic periphery are more indebted today than they were at the time of the 2010 eurozone sovereign-debt crisis. This more hawkish interest-rate policy, coupled with a shift to quantitative tightening, now risks triggering another round of the euro zone debt crisis”.
EURJPY Forecast Today
The Japanese central bank is acting quietly in the background, keeping rates low with a slight cap raise on the Yield Curve Control measure. Traders looked for that to signal a turnaround in the near term. Still, Asian banks can benefit from the recent US and European banking turmoil.
Japan’s Finance Minister Shunichi Suzuki said in parliament recently that AT1 bonds at Japanese banks do not have the same clause that wiped out $17 billion worth of debt at Credit Suisse. The Japanese yen could benefit from further instability in the banking system, and the euro may not hold onto the recent rally.
