The EUR/JPY cross trades with a bullish tone as the recent rally extends beyond 130. A few days ahead of the Bank of Japan’s decision, the JPY remains offered across the board, as all JPY pairs rallied recently.
At this week’s meeting, the Bank of Japan signaled that it intends to ease its yield curve control efforts. Since 2016, the Bank of Japan has adopted a tight yield curve control policy, with the aim of keeping the long-term yields close to zero. However, it recently announced its willingness to let the yields rise – should it do so, the JPY pairs are poised to react.
Higher yields should, in theory, be bullish for the JPY and thus bearish for the JPY pairs. However, the market chose to ignore the message, and it appears that it is calling a bluff so far.
EUR/JPY Technical Analysis
While inside the rising channel, the EUR/JPY remains bid and likely to make new highs. Bears would focus on the price reaching the upper edge of the channel and may want to sell there against 132.50 and targeting a move to 128 and beyond. Conservative bears may want to wait for the price to break below the channel before going short with a stop at the highs.