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In focus today

In the euro area, focus today is on the September inflation data from Spain, France, and Belgium, which will give clues on the euro area data on Tuesday next week. We expect euro area HICP inflation to decline significantly to 1.8% y/y in September from 2.2% driven by both base effects on energy inflation and declining monthly energy prices. Excluding energy inflation and food, we expect core inflation remained at 2.8% y/y (0.20% m/m s.a.) due to sticky services inflation. The dip in headline inflation below 2% is expected to be temporary due to base effects and we expect inflation to rise above 2% again in November and December.

In Germany, we focus also on data on unemployment as the German labour market has weakened lately in contrast to other euro-area countries.

From the US, headline and core PCE inflation are released today, where markets see prints at +2.3% y/y and +2.7% y/y, respectively.

Although economic activity in Norway has been relatively weak over the past year, there has been only a moderate rise in unemployment. We expect that the unemployment rate increased marginally to 2.1% (seasonally adjusted) in September. Higher real wage growth and a period without rate hikes have improved the purchasing power of households, and private consumption picked up in the summer months. However, we expect that the retail trade was unchanged in August.

We are yet to see results from the Japanese ruling LDP leadership election, which will be interesting for markets due to the recent hawkish turn of the BoJ looking highly politically influenced. Abenomics loyalists preferring a slow normalisation of monetary policies as well as hawks are on the ticket in an election that will be heavily influenced by behind-the-scenes arm wrestling among party heavyweights.

Economic and market news

Oil prices tumbled about 2.5% on the news that Saudi Arabia has allegedly abandoned its (unofficial) price target of 100 USD/bbl. and instead opt to boost production to regain market shares. Note that we have no official communication yet, but the existing OPEC+ production cuts are slated to expire on 1 December, and this will be a shift from the trend since 2022 where focus has been on cutting, rather than increasing, oil production.

The SNB cut its policy rate by 25bp to 1.00% as we expected. Markets were close to evenly split between 25bp and 50bp, which resulted in a slight move lower in EUR/CHF upon announcement, though dovish communication caused the cross to erase losses. See more below.

In China, we got more stimulus signals with both verbal communication from the Politburo on the need for policy action to turn the economy as well as specific details on handouts and spending-vouchers, capital injection into state banks, and support for the property market. The combined package from the latest days highlights the strongest focus on ending the crisis we have seen since 2021 in our view. Chinese stocks, metal prices and the CNY continued to rally during the day.

Tokyo CPI saw core inflation at +0.19% m/m adjusted for seasonality, which is well in line with the BoJ's target of 2% annual inflation. The so-called 'core core' figure, which excludes food and energy, printed at just at 0.06% m/m seasonally adjusted however, indicating somewhat softer price pressure providing downside risk for inflation, and the market reaction was initially for a slightly weaker yen. Broadly, however, the BoJ will be satisfied with the latest print, and it will likely not change the decision in October, where we expect a hold.

Equities: What a day in global equities yesterday, marked by significant global increases and an intriguing sector rotation. On one hand, China is stimulating its economy; on the other, Saudi Arabia is potentially abandoning its oil price target to regain market share. In Europe yesterday, the energy sector was down more than 3%, while the consumer discretionary sector rose by more than 5%, driven by car producers and, notably, heavyweight luxury brands. This serves as a poignant reminder for all of us to check whether our judgments are correct and for the right reasons. It's easy to deceive oneself these days. In the US yesterday, the indices were as follows: Dow +0.6%, S&P 500 +0.4%, Nasdaq +0.6%, and Russell 2000 +0.6%. Most Asian markets are continuing to rise this morning, once again led by significant gains in Chinese stock markets - it looks like we are on track for best week for Chinese stocks since 2008(!).

FI: There was modest movement in European government bond yields yesterday apart from the continued pressure on France, but neither the Bund ASW-spread nor the BTPS-Bund spread has widened as we saw back in June. Hence, we are not seeing the same kind of risk-off movement as we saw back in June when President Macron called a snap election. Revision of US economic data as well as lower-than-expected jobless claims sent US bond yields higher with 2Y Treasuries rising almost 10bp yesterday.

FX: EUR/USD has spent most of the last two weeks within the 1.11-1.12 interval, though with a couple of unsuccessful attempts to break out of the range. USD/JPY tried to establish above 145 but was rejected twice yesterday. The British pound continues to shine on the back of relatively solid data and tight monetary policy stance - yesterday GBP/USD made a new 2.5year high at 1.3430. The Swiss franc strengthened after the SNB cut 25bp and EUR/CHF is back trading in the mid-0.94s. EUR/NOK held on to previous gains just below 11.80, while EUR/SEK was rangebound around 11.30. USD/CNY has fallen below 7.02 in recent days on the stronger stimulus signals and likely new capital inflows to the stock market. Our medium-term view is still that the cross will resume higher as we remain bullish on the USD. But there is rising downside risk to our 7.25 12M forecast. EUR/CNY has fallen to around 7.84, the middle of the 7.70-7.95 range it has traded in for a long time now. We could see more downside in the medium term as it is expected to also get support from a lower EUR/USD. The idiosyncratic strengthening of the CNY has led to a bit of decoupling in the normal high correlation between EUR/USD and EUR/CNY, but we expect it to resume when the dust settles from the recent days action.

The S&P 500 printed its 42nd record high this year yesterday on the back of a mix bag of economic and corporate news.

First, the latest GDP data confirmed that the US economy grew 3% in Q2 and the price pressures fell. Corporate profits rose 3.5% in Q2 versus a 1.7% gain penciled in by analysts, and up from negative 2% the quarter before! Wait, wait, wait. The initial jobless claims came in lower than expected and continuing claims fell, defying the worries of an alarmingly softening jobs market. And if you put the strong data in the context of questionably dovish Fed, the US economy will soft-land on a mountain. It will be great if – and only if – the loosening monetary policy fed to a strong economy doesn’t boost inflation.

Due today, the Fed’s favourite gauge of inflation, the core PCE index, is expected to remain unchanged at 0.2% on a monthly basis, and print a small uptick – from 2.6% to 2.7% - on a yearly basis. Additionally, the personal income may have risen faster, but personal spending a bit slower than the previous month. A set of data in line with expectations will certainly keep the soft-landing vibes in play and secure a 43rd record high for the S&P500 before the weekly closing bell. But a stronger-than-expected PCE read, God Forbid, could bring the idea that the Fed and the dovish Fed expectations may have gone ahead of themselves and call for some correction. Yesterday’s robust GDP read brough the probability of 50bp cut at the November meeting slightly below 50%, but the chances are still very close to a coin toss.
China’s pandora box

China announced a mix bag of monetary and fiscal measures this week to prop up its economy and bring investors back to its shattered markets. This explosive cocktail of monetary and fiscal measures was what investors were demanding since years. And the satisfaction is clear – at least in the short run. The CSI 300 index gained more than 15% since the beginning of the week. The index pulled out the May-to-date negative trending channel top, and the almost two-year bearish trend top to catapult itself into a greatly overbought territory just before the beginning of a national holiday in China, next week. Likewise, Nasdaq’s Golden Dragon index is up by 20% since the week began and broke above its own two-year downtrending channel top. Buyers were so crowded in Shanghai that Shanghai’s stock exchange encountered problems to follow up orders.

Could this euphoria last? Maybe. The structural and balance sheet challenges, heavy local debt burden, the aging population, deflation and loss of confidence are hard to reverse. Enthusiasm could fade rapidly if the economy doesn’t react. Today, all we have in hand is that the Chinese industrial profits grew 0.5% ytd in August, meaningfully down from 3.6% printed a month earlier.

Ouch

WSJ reported that Saudi Arabia will drop its $100pb price target and start increasing output in December to gain market share. Ouch. This was a possibility that we were exploring since Saudi decided to shoulder production cuts by unilateral cuts. It’s finally happening now. If Saudi is not playing the production restriction game along with its OPEC peers, it will be hard for the rest of OPEC to hold on to a price-supportive strategy Concretely, if Saudi starts pumping, the others must follow to increase their revenue, as well. And that’s outright bearish for oil prices, also provided that the non-OPEC countries are pumping abundantly as well.

Voila, US crude is down to $68pb and the short-term outlook remains strongly negative.

In Europe

The Swiss National Bank (SNB) cut the interest rates by 25bp yesterday, as expected. The USDCHF barely reacted to the news but the SMI index closed the session near the highest levels since the beginning of this month. Beyond the Swiss borders, the Stoxx 600 flirted with ATH levels as the rate cut expectations in the developed world combined to the Chinese stimulus measures boosted appetite for Europe’s China and growth-sensitive stocks. LVMH jumped 10% yesterday as if the Chinese government decided to pump money directly into Louis Vuitton.

Anyway, the early CPI reads for France and Spain for September are due to be released this morning. The figures are expected to point at a further easing in price pressures. If that’s the case, we could see the 1.12 resistance strengthen before the closing bell. But the US dollar, and the PCE report will say the last word.

Key Highlights

• USD/JPY started a decent increase above the 142.50 resistance.
• A key bullish trend line is forming with support at 144.00 on the 4-hour chart.
• Oil prices started another decline from the $73.50 resistance zone.
• Bitcoin might aim for more gains above the $65,000 level.

USD/JPY Technical Analysis

The US Dollar found support near 139.60 against the Japanese Yen. USD/JPY formed a base and started a fresh increase above 141.20.

Looking at the 4-hour chart, the pair climbed above the 142.50 and 1.3400 levels. It even settled well above the 100 simple moving average (red, 4-hour) and the 200 simple moving average (green, 4-hour).

There was a clear move above the 61.8% Fib retracement level of the downward move from the 147.20 swing high to the 139.57 low. On the upside, the pair now faces hurdles near the 145.40 zone.

The 76.4% Fib retracement level of the downward move from the 147.20 swing high to the 139.57 low is also near 145.40. A clear move above the 144.40 and 144.50 levels might set the pace for a move toward 145.50. Any more gains might call for a test of the 146.20 zone.

On the downside, immediate support sits near the 144.20 level. There is also a key bullish trend line forming with support at 144.00 on the same chart, below which the pair might test 143.50.

The next key support sits near the 142.80 level and the 100 simple moving average (red, 4-hour). Any more losses could send the pair toward the 142.00 support zone.

Looking at Oil, there was a fresh bearish wave from $73.50 and the bears seem to be back in action.

Upcoming Economic Events:

• US Personal Income for August 2024 (MoM) - Forecast +0.4%, versus +0.3% previous.
• US Core Personal Consumption Expenditure for August 2024 (MoM) - Forecast +0.2%, versus +0.2% previous.

Daily Pivots: (S1) 0.6841; (P) 0.6873; (R1) 0.6927; More...

Intraday bias n AUD/USD remains neutral for the moment, and more consolidations could be seen below 0.6907. But further rally is expected as long as 0.6782 support holds. Firm break of 61.8% projection of 0.6348 to 0.6823 from 0.6621 at 0.6915 will extend the rise from 0.6348 to 100% projection at 0.7096 next.

In the bigger picture, overall, price actions from 0.6169 (2022 low) are seen as a medium term corrective pattern, with rise from 0.6269 as the third leg. Firm break of 0.6870 resistance will target 100% projection of 0.6269 to 0.6870 from 0.6340 at 0.6941, and then 138.2% projection at 0.7179. This will now remain the favored case as long as 0.6621 support holds.

Risk-on sentiment continues to dominate global financial markets today, driven by widespread monetary easing and a significant boost from China’s latest stimulus measures. US equities finished strong overnight, with all major indexes posting gains. S&P 500 hit a fresh record for the third consecutive time this week. Meanwhile, Germany’s DAX also surged to an all-time high.

In Asia, stocks in Hong Kong and mainland China skyrocketed as China's stimulus measures began to take effect. The injection of liquidity and supportive policies have renewed confidence among investors, leading to significant rallies in these markets.

The currency markets mirror this risk-on environment. Kiwi and Aussie are the week's biggest winners so far, followed by Loonie. On the opposite end of the spectrum, Japanese Yen has been the weakest, followed by Dollar and Euro. Swiss Franc and British Pound are trading in mixed in the middle. Today’s releases of Canadian GDP and US PCE inflation data are not expected to significantly alter these standings.

Among key currency pairs, NZD/JPY and AUD/JPY are vying for the top spot this week. NZD/JPY has a slight edge, gaining close to 2% for the week. Technically, NZD/JPY's breach of 91.65 resistance today indicates resumption of whole rally from 83.02. This rise is seen as the second leg of the corrective pattern from 99.01 high. Further rally is now expected as long as 90.43 minor support holds. Next target is 100% projection of 83.02 to 91.65 from 86.26 at 94.89.

In Asia, at the time of writing, Nikkei is up 0.30%. Hong Kong HSI is up 3.90%. China Shanghai SSE is up 2.14%. Singapore Strait Times is down -0.39%. Japan 10-year JGB yield is down -0.0138 at 0.817. Overnight, DOW rose 0.62%. S&P 500 rose 0.40%. NASDAQ rose 0.60%. 10-year yield rose 0.010 to 3.791.

Japan's Tokyo core inflation slows to 2%, supporting BoJ's cautious approach

Japan's Tokyo CPI core (excluding fresh food) slowed from 2.4% yoy to 2.0% yoy in September, aligning with expectations and marking its lowest level since May. Headline CPI dropped to 2.2% yoy from 2.6% yoy , while CPI core-core (excluding food and energy) remained stable at 1.6% yoy.

The primary driver of the deceleration in inflation was reduction in electricity and gas prices, influenced by government energy subsidies reintroduced by outgoing Prime Minister Fumio Kishida. These subsidies helped alleviate the impact of a particularly hot summer, shaving 0.5 percentage points off overall inflation.

This data, especially the stable core-core inflation, supports BoJ's cautious stance regarding more tightening. BoJ Governor Kazuo Ueda recently noted that inflationary risks have diminished, particularly with Yen's recent gains. BoJ is likely to remain on hold during its upcoming policy meeting on October 31.

PBoC cuts RRR and repo rate

In a follow-up to Governor Pan Gongsheng's earlier remarks this week, the People's Bank of China announced today a 50bps cut in the reserve requirement ratio and a 20bps reduction in the seven-day reverse repurchase rate.

This move is intended to release approximately CNY 1T in long-term liquidity, enabling banks to lend more and increase purchases of government bonds aimed at funding infrastructure projects. With the cut, the weighted average RRR will drop to around 6.6%. The central bank also lowered the seven-day reverse repo rate from 1.7% to 1.5%.

Further fiscal measures are anticipated before China's National Day holiday on October 1, as the Politburo has signaled a heightened focus on addressing economic pressures.

Reports indicate that the government will raise CNY 1T via special bonds, which will fund consumer goods subsidies, upgrades to business equipment, and provide a monthly allowance of CNY 800 yuan per child for households with multiple children. Additionally, another CNY 1T in special sovereign debt could be issued to help local governments manage their mounting debt burdens.

Fed's Cook reaffirms support for 50bps rate cut

Fed Governor Lisa Cook said she "whole heartedly" supported last week's 50bps rate cut, emphasizing that it was a reflection of "growing confidence" in Fed's ability to balance a solid labor market with moderate economic growth.

Cook noted in a speech overnight that the cut aligns with the ongoing progress towards bringing inflation back down to 2% target.

Looking ahead, Cook stressed the importance of "carefully assessing incoming data" and weighing risks as Fed considers further policy actions.

She highlighted the return to balance in the labor market and inflation as a sign of the economy’s "normalization" post-pandemic, adding that such balance is critical to sustaining long-term labor-market strength.

The normalization of inflation is particularly encouraging, Cook added, as it provides the foundation for maintaining a resilient job market. This balance between supply and demand will be central to future Fed decisions.

Looking ahead

France consumer spending, Germany unemployment, and Eurozone economic sentiment will be released in European session. Later in the day, Canada will publish monthly GDP. US personal income and spending, PCE inflation, and goods trade balance will be featured too.

AUD/USD Daily Report

Daily Pivots: (S1) 0.6841; (P) 0.6873; (R1) 0.6927; More...

Intraday bias n AUD/USD remains neutral for the moment, and more consolidations could be seen below 0.6907. But further rally is expected as long as 0.6782 support holds. Firm break of 61.8% projection of 0.6348 to 0.6823 from 0.6621 at 0.6915 will extend the rise from 0.6348 to 100% projection at 0.7096 next.

In the bigger picture, overall, price actions from 0.6169 (2022 low) are seen as a medium term corrective pattern, with rise from 0.6269 as the third leg. Firm break of 0.6870 resistance will target 100% projection of 0.6269 to 0.6870 from 0.6340 at 0.6941, and then 138.2% projection at 0.7179. This will now remain the favored case as long as 0.6621 support holds.

Economic Indicators Update

In a follow-up to Governor Pan Gongsheng's earlier remarks this week, the People's Bank of China announced today a 50bps cut in the reserve requirement ratio and a 20bps reduction in the seven-day reverse repurchase rate.

This move is intended to release approximately CNY 1T in long-term liquidity, enabling banks to lend more and increase purchases of government bonds aimed at funding infrastructure projects. With the cut, the weighted average RRR will drop to around 6.6%. The central bank also lowered the seven-day reverse repo rate from 1.7% to 1.5%.

Further fiscal measures are anticipated before China's National Day holiday on October 1, as the Politburo has signaled a heightened focus on addressing economic pressures.

Reports indicate that the government will raise CNY 1T via special bonds, which will fund consumer goods subsidies, upgrades to business equipment, and provide a monthly allowance of CNY 800 yuan per child for households with multiple children. Additionally, another CNY 1T in special sovereign debt could be issued to help local governments manage their mounting debt burdens.

Japan's Tokyo CPI core (excluding fresh food) slowed from 2.4% yoy to 2.0% yoy in September, aligning with expectations and marking its lowest level since May. Headline CPI dropped to 2.2% yoy from 2.6% yoy , while CPI core-core (excluding food and energy) remained stable at 1.6% yoy.

The primary driver of the deceleration in inflation was reduction in electricity and gas prices, influenced by government energy subsidies reintroduced by outgoing Prime Minister Fumio Kishida. These subsidies helped alleviate the impact of a particularly hot summer, shaving 0.5 percentage points off overall inflation.

This data, especially the stable core-core inflation, supports BoJ's cautious stance regarding more tightening. BoJ Governor Kazuo Ueda recently noted that inflationary risks have diminished, particularly with Yen's recent gains. BoJ is likely to remain on hold during its upcoming policy meeting on October 31.

Fed Governor Lisa Cook said she "whole heartedly" supported last week's 50bps rate cut, emphasizing that it was a reflection of "growing confidence" in Fed's ability to balance a solid labor market with moderate economic growth.

Cook noted in a speech overnight that the cut aligns with the ongoing progress towards bringing inflation back down to 2% target.

Looking ahead, Cook stressed the importance of "carefully assessing incoming data" and weighing risks as Fed considers further policy actions.

She highlighted the return to balance in the labor market and inflation as a sign of the economy’s "normalization" post-pandemic, adding that such balance is critical to sustaining long-term labor-market strength.

The normalization of inflation is particularly encouraging, Cook added, as it provides the foundation for maintaining a resilient job market. This balance between supply and demand will be central to future Fed decisions.

Key insights from the week that was.

Following last week’s monetary policy announcements by the US FOMC and other major central banks, this week the spotlight turned to the RBA. The Board’s September meeting was predictably uneventful, with the cash rate unchanged at 4.35% and only incremental tweaks to their communication, which continues to emphasise labour market tightness and the need to bring aggregate demand and supply into balance. On the day, financial markets focused on the revelation that, in contrast to the prior policy meeting in August, this time the Board did not explicitly consider raising interest rates further. We see no reason to alter our view that the cash rate will remain unchanged until February, when we expect the first of four 25bp cuts through 2025.

This week’s new economic data, released after the RBA meeting, highlighted that the economy continues to make progress towards better balance between demand and supply. Indeed, the August CPI print showed a drop in headline inflation from 3.5%yr to 2.7%yr, in line with our expectations and the lowest since August 2021. The 17.6%yr drop in electricity prices, the steepest on record, reflecting rebates provided by the Commonwealth Energy Bill Relief Fund and state governments, was the main factor driving inflation lower. The RBA Governor suggested in Tuesday’s post-meeting press conference that policymakers will largely look through the fall owing to its temporary nature; however, the trimmed mean inflation measure, which excluded the electricity and auto fuel price declines, also eased from 3.8%yr to 3.4%yr, a new low for this inflation cycle. A more comprehensive picture of the developments in consumer prices will be available once the Q3 CPI data is released at the end of October. Our calculations suggest the August monthly figures are consistent with our existing 0.3%qtr and 0.7%qtr Q3 headline and trimmed mean CPI forecasts.

Meanwhile, the Q3 data on job vacancies, a good indicator of labour demand, showed that conditions in the jobs market continue to loosen. A 5.2% drop this quarter left the level of vacancies at 330k, more than 30% below the peak seen in May 2022 but still well above pre-pandemic norms (the long-run average is around 180k).

Public demand, productivity and the implications for inflation also received considerable attention in Westpac Economics’ analysis this week, and was brought together with the RBA view in Chief Economist Luci Ellis’ latest video update. Also of significance for the medium-term, the RBA’s latest Financial Stability Review was released.

Offshore, policy developments in China stole the show. Market participants have long wanted to see authorities in China make a stand over their growth ambitions and neutralise downside risks for the property market and consumption. This week’s announcements exceeded these hopes.

On Tuesday, the PBoC Governor Pan Gongsheng held a lengthy press conference to detail a comprehensive set of new and expanded monetary initiatives to support activity and sentiment across the economy. The 7-day reverse repurchase rate and the mortgage rate for existing borrowers were both cut, and guidance on forthcoming cuts to the loan prime rate and deposit rates given. The PBoC Governor also hinted at households being able to refinance with another lender if their current bank cannot accommodate the planned 50bp mortgage rate reduction for existing mortgages – the average loan rate for existing first-home borrowers is approximately 80bps higher than for new. More importantly, with respect to the quantum of credit in the economy, the reserve requirement ratio was cut by 50bps and a willingness to cut further into year-end shown. An injection of additional capital into the largest banks (who are state controlled and already have very healthy capital positions) was also flagged. Combined, these initiatives will materially increase available credit to all sectors. Also important for sentiment and the functioning of housing markets, second home buyers are being enticed to enter the market through a reduction in the minimum deposit from 25% to 15%. State-owned firms can also now borrow 100% of the principal needed to purchase unsold homes from the PBoC, up from 60% in May.

Also in focus for authorities is the state of the equity market. To aid a robust and sustained recovery in equities, the PBoC Governor announced at least USD70bn of 'liquidity support' for equity markets through a swap facility for participants – allowing less-liquid existing holdings to be swapped for high-quality liquid assets to back additional equity purchases. A re-lending facility will provide another circa USD40bn of liquidity to fund share buy-backs and additional cross-holdings. There was also reference to the potential establishment of a market stabilisation fund, while merger and acquisition activity is to be encouraged.

These initiatives are material and will be deployed with haste, but by themselves are more likely to strengthen and sustain a recovery than commence it. Rather it is the Politburo’s subsequent announcements which will act as the catalyst for recovery in the property market and consumption. Arguably of greater significance than the value of support mooted is official media’s reporting of the Politburo’s pledge to make the property market “stop declining”. This appears to apply to both investment activity and prices and comes in response to consumers' mounting concerns over their wealth and the uncertain timing and quality of dwelling completion. Western media including Reuters and Bloomberg subsequently reported that backing this edict is 2 trillion yuan (circa US$280bn) of special sovereign bond issuance for late-2024 from the Ministry of Finance to fund stimulus targeting consumption and to alleviate the financial pressures of local governments. While late in the year, the combined weight of the monetary and fiscal measures announced and mooted is highly likely to lead to the 5.0% growth target for 2024 being achieved and should also see a similar outcome in 2025. Success thereafter will be determined by how the private sector, particularly the consumer, responds.

Over in the US, the calendar was relatively quiet, with the annual revisions to GDP the only release of material significance. From Q2 2020 through 2023, GDP is now estimated to have averaged 5.5% annualised, up from 5.1% in the initial estimates, with two-thirds of the revision reportedly the result of stronger consumption. For 2022 and 2023 respectively, growth is now estimated at 2.5% (from 1.9%) and 2.9% (from 2.5%).

As has happened a number of times in this cycle, Gross Domestic Income was revised up materially for 2023 and the first half of 2024. In Q2 2024 alone, annualised GDI growth has been revised up 2ppts to 3.4%; and, in 2023, growth is estimated at 1.7% versus 0.4%. These revisions have resulted in the household savings rate being lifted from 3.3% to 5.2%. All told, these revisions show the underlying strength of the US economy, the consumer in particular. But also, cross referenced against the consumer price outcomes of the past two years, the importance of the supply side for inflation. These outcomes will provide the FOMC with comfort over the underlying health of their economy as well as the sustainability of the return of annual inflation to target.

EURJPY rising inside minor impulse wave 3
• Likely to reach resistance level 162.8

EURJPY currency pair earlier continues to rise inside the minor impulse wave 3, which started earlier from the support area located between the long-term support level 154.85 (which has been reversing the pair from 2023) and the lower daily Bollinger Band.

The active impulse wave 3 belongs to the intermediate impulse wave (5) from the start of August.

Given the strongly bearish yen sentiment seen across the FX markets, EURJPY currency pair can be expected to rise further to the next resistance level 162.8 (top of wave b from the start of September).