EUR/JPY has been on a massive rally since 2020, gaining 50 cents, but it retreated 3 cents lower last week and now sellers are facing the 160 zone, where moving averages are waiting to provide support. Last night’s GDP report from Japan is also helping the cause for sellers, since it was revised to 0.1% from -0.4% previously, which means that Japan is not in a recession.

EUR/JPY Daily Chart – The Pullback Some More Room to Run

EUR/JPY started the rally in 2020 during the pandemic period when the price was trading around 115. Since then the upside momentum has been relentless, with buyers jumping in after every dip and pushing the highs higher. Moving averages have also been helpful in providing support during pullbacks in different timeframes.

So, the forthcoming situation in the EUR/JPY pair largely depends on the strength of the current support line. If MAs and the support zone at 0.60 hold firm, we can anticipate renewed bullish attempts, with positive positions potentially targeted, possibly starting at the 164 area at the top again.

However, if the support line fails to hold, confirming a breach of the 160 support zone, it would indicate a shift towards the bearish track. In such a scenario, significant losses could be expected for the EUR/JPY pair as selling pressure intensifies. Traders and investors should closely monitor the price action around the support level and take into account the central bank policies to gauge the potential direction of the EUR/JPY pair, after the positive revisions in the Japanese Q4 GDP last night.

The preliminary reading for GDP in Japan suggested that the country had entered another recession, implying a contraction in economic activity. However, the final reading has undergone substantial revision, indicating that Japan was not in a recession after all.

Japan Final Q4 GDP Report

• Japan (final) Q4 GDP +0.1% vs 0.3% expected
• Preliminary GDP for Q4 was -0.4%
• Annualized GDP 0.4% vs -0.4% in the prelim reading
• Q3 GDP was -0.7%
• Private consumption revised to -0.3% (prelim was -0.2%), down for the third straight quarter.
• Capex +2.0% QoQ vs -0.1% prelim

EUR/JPY Live Chart