EUR/JPY rises above 157.00, shrugging off weak ZEW report

• EUR/JPY ignores weaker-than-expected ZEW data from the Eurozone and Germany, supported by USD/JPY strength.
• Positive US retail sales figures are driving USD/JPY higher, despite no clear indication of the size of the Fed’s rate cut ahead of the FOMC meeting.
• ECB member Simkus rules out a rate cut in October, while analysts speculate the BoJ could raise rates to 0.50% by the end of the year.

EUR/JPY is trading in the green, up 0.48%, shrugging off worse-than-expected ZEW data from the Eurozone (EU) and Germany. The USD/JPY recovery boosted the pair. At the time of writing, the cross is trading at 157.28 after touching a low of 156.05.

EUR/JPY rises to 157.28 as strong US retail sales data weighs on Japanese yen

Data from the United States (US) supported USD/JPY after retail sales beat estimates of a -0.2% contraction, having expanded 0.1% monthly in August. While the data is positive, it failed to provide any indication of the size of the Federal Reserve’s rate cut on Wednesday.

Markets reacted positively to the announcement as Wall Street extended gains and the greenback rallied ahead of the Federal Open Market Committee’s (FOMC) decision.

In addition, the EU ZEW Survey of expectations fell to an eleven-month low from 17.9 to 9.3 in September, marking the third straight month of deterioration amid continued uncertainty over the economic outlook and the direction of monetary policy.

Meanwhile, European Central Bank (ECB) member Gediminas Simkus said the economy was developing as planned and ruled out an interest rate cut in October.

On the Japanese yen front, the Bank of Japan (BoJ) will hold its latest monetary policy meeting. Consensus suggests the BoJ will remain on hold, but analysts at Standard Chartered suggest rates could reach 0.50% by the end of the year.

EUR/JPY Price Forecast: Technical Insights

Given the fundamental background, the FOMC meeting could affect both countries. If the Fed’s decision triggers a risk-off environment, look for more downside for the EUR/JPY pair.

However, at the time of writing, the cross has cleared the Tenkan-Sen at 157.46. It aims to challenge Senkou Spa A at 158.49, but first, traders should recover 158.00. If these levels are removed, the next stop would be the Kijun-Sen at 159.51.

On further weakness, EUR/JPY could retest the recent low at 155.14, the daily low since September 16.