20 June 2025,03:33
Daily Market Analysis
20 June 2025, 03:33
Key Takeaways:
*The Japanese Yen was encouraged by the latest Japan CPI reading that came at a 2-year high.
*The hawkish narrative in the BoJ’s May meeting minutes provides buoyancy for the Japanese Yen.
Market Summary:
Crude oil has remained under upward pressure this week, driven by escalating Middle East tensions, The Japanese yen regained ground in the latest session after Japan’s National Core CPI surged 3.7% year-on-year—its highest reading since February 2023—surpassing market expectations and providing buoyancy for the currency. The hotter-than-expected inflation data has complicated the Bank of Japan’s policy outlook, forcing a delicate balancing act between curbing price pressures and preserving economic stability amid rising global uncertainty.
Adding to the yen’s momentum, the Bank of Japan’s meeting minutes—released earlier today—revealed growing consensus among policymakers to push interest rates higher. While the central bank left its benchmark rate unchanged at 0.5%, the minutes indicated a tilt toward further tightening, with most members backing a gradual exit from ultra-loose policy.
However, not all members were aligned. Some voiced caution, citing downside risks from U.S. trade policy shifts, particularly following former President Trump’s renewed tariff threats, which could weigh on Japan’s export-driven economy.
In a sign of external fragility, the BoJ trimmed both its growth and inflation projections, underscoring the dilemma faced by policymakers: how to respond to rising domestic inflation without exacerbating downside risks linked to global headwinds.
Market Implications: A Faster Hike Cycle?
The upside CPI surprise has raised market bets that the BoJ could accelerate its rate hike cycle. If upcoming commentary suggests openness to near-term policy normalization, the yen could extend its rally in the sessions ahead.
Key Risk Catalysts
The yen’s near-term trajectory hinges on the BoJ’s policy path. While inflation data justifies a hawkish turn, lingering uncertainty around external demand and trade policy may keep policymakers cautious. Traders should watch for fresh signals from Tokyo and Washington for direction.
The EURJPY pair staged a technical rebound after a brief retracement from its highest level since last August at 167.61. The pullback found firm support above the 61.8% Fibonacci retracement level at 166.05, from which the pair bounced back, reclaiming ground toward its recent peak—a move that reinforces the bullish outlook.
Momentum indicators align with the upward bias. The Relative Strength Index (RSI) rebounded after holding above the midline, suggesting underlying strength remains intact. Meanwhile, the MACD formed a bullish crossover (golden cross) before slipping briefly below the zero line, indicating that upward momentum is still in play despite short-term volatility.
With the pair consolidating near its recent highs and key technical support levels holding firm, EURJPY may be poised for another leg higher. A sustained break above the 167.61 resistance could open the door toward fresh multi-month highs, especially if risk appetite improves and eurozone macro data continues to support the common currency.
Resistance level: 3381.80, 3483.75
Support level: 3300.00, 3225.00
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