EUR/USD, EUR/JPY, EUR/GBP Outlook: BOJ Policy Rate and CPI Data Shift Market Sentiment

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Published: Dec 18, 2024, 10:17 GMT+00:00

Key Points:

Eurozone Final CPI fell to 2.2%, below the 2.3% forecast, signaling softer inflation and weighing on the euro.
German ZEW Economic Sentiment surged to 17.0, reflecting improved optimism despite weak Ifo Business Climate data.
UK CPI steady at 2.6%; Core CPI softened to 3.5%, while house prices rose 3.4% y/y, signaling cautious optimism.

EUR/USD, EUR/JPY, EUR/GBP Outlook: BOJ Policy Rate and CPI Data Shift Market Sentiment

Market Overview

The euro faces renewed pressure as Eurozone Final CPI dipped to 2.2%, below the 2.3% forecast, signaling easing inflation. Meanwhile, German ZEW Economic Sentiment jumped to 17.0, showing improved economic confidence. However, weaker German Ifo Business Climate at 84.7 highlights lingering challenges.

In the UK, inflation data met expectations with CPI steady at 2.6% and Core CPI slightly softer at 3.5%, while rising house prices (3.4% y/y) signal cautious economic optimism.

For Japan, the trade deficit widened to -0.38T, undershooting expectations. Traders now focus on the Bank of Japan’s monetary policy decisions, including the policy rate announcement and press conference, which may influence JPY sentiment on Thursday.

EUR/USD – Technical Analysis

EUR/USD Price Chart – Source: Tradingview

The EUR/USD pair is trading at $1.04927, up a modest 0.02%, as the market tests a symmetrical triangle pattern on the 4-hour chart. The key pivot point at $1.05134 serves as a crucial decision level. A break above this could signal bullish momentum, with immediate resistance at $1.05640 and a higher target at $1.06299.

Conversely, failure to breach the pivot could see the pair retreat toward immediate support at $1.04543, with deeper support at $1.03953.

Technical indicators like the 50 EMA ($1.05020) and 200 EMA ($1.05301) highlight a near-term bearish bias below $1.05134. Traders are eyeing the triangle’s resistance zone, as a decisive breakout will determine the pair’s next move.

EUR/GBP – Technical Analysis

EUR/GBP Price Chart – Source: Tradingview

The EUR/GBP pair is trading at 0.82706, up 0.21%, with a measured upward movement on the 2-hour chart. The 50 EMA at 0.82746 limits additional gains and serves as a resistance point.

An ascending trendline offers support, indicating buying activity. A move above the pivot point at 0.82765 may lead the pair to immediate resistance at 0.82956, with the next target around 0.83267.

On the downside, support is seen at 0.82498, followed by a lower level at 0.82269 if selling pressure increases. The 0.83250 area warrants attention as a downward trendline nearby could create resistance, potentially slowing upward progress if the pair approaches that range.

EUR/JPY – Technical Analysis

EUR/JPY Price Chart – Source: Tradingview

The EUR/JPY pair is trading at 161.172, up 0.07%, maintaining a steady position within an upward channel on the 4-hour chart. The pivot point at 160.797 is a critical level, providing strong support for the current bullish trend. As long as the pair remains above this level, the path toward immediate resistance at 162.496 and potentially higher to 163.928 remains viable.

The 50 EMA at 161.023 reinforces the near-term bullish bias, while the 200 EMA at 160.476 underscores additional support. However, a break below 160.797 could shift sentiment sharply bearish, exposing the pair to deeper support levels at 159.171 and 157.859.

About the Author

Arslan Aliauthor

Arslan, a webinar speaker and derivatives analyst, has an MBA in Finance and MPhil in Behavioral Finance. He guides financial analysis, trading, and cryptocurrency forecasting. Expert in trading psychology and sentiment.