The exchange rate of EUR/JPY has been bullish since 2020, with the prie gaining more than 50 cents from the bottom, however, it has formed a top around 165. Recently the Japanese GDP was revised higher, which means that Japan didn’t fall in contraction in the previous two quarters, however, today JPY traders have been concentrating on the earnings report from Japan.

EUR/JPY Technical Analysis – EUR/JPY Chart H4

MAs Keep Pushing the Lows Higher

EUR/JPY started its upward trajectory in 2020 amid the pandemic, when it was trading at 114. Since then, the momentum has remained bullish, characterized by consistent upward movement punctuated by periodic pullbacks. During these pullbacks, buyers have entered the market, driving prices higher and establishing new highs as the Bank of Japan kept interest rates negative.

Moving averages have played a significant role as well in supporting this forex pair during these pullbacks across various timeframes. They act as dynamic support levels, providing a visual that we as forex traders have often used to identify potential entry points. last week EUR/JPY was testing the 50 SM A(yellow) but that moving average held as support and the price bounced higher.

Expectations for the Cash Earnings

Today the expected rise in cash earnings to 3% in February, up from 2% in January, is noteworthy given recent wage discussions and comments from the Bank of Japan (BoJ). BoJ Governor Ueda’s remarks following the conclusion of annual salary talks indicate optimism about inflation gradually stabilizing. Ueda’s statement suggested that the BoJ remains committed to its 2% inflation target and will adjust interest rates based on progress toward this objective.

Maintaining accommodative monetary conditions is emphasized as long as trend inflation remains below 2%. Some analysts anticipate a more significant rebound in cash earnings starting in April and May as newly agreed wage negotiations take effect. This suggests that wage dynamics will play a crucial role in shaping inflationary trends and monetary policy decisions in Japan. The BoJ’s continued focus on achieving its inflation target underscores the importance of wage growth in driving overall economic conditions and inflation expectations.

Japan February Labour Cash Earnings

• February Labour cash earnings YoY +1.8% vs +1.8% expected
• January cash earnings YoY were +2.0%

• February Real wages (ie inflation-adjusted wages) YoY -1.3% vs -1.4% expected

• January Real wages (ie inflation-adjusted wages) were -0.6%

EUR/JPY Live Chart