FX.co ★ Blackpink | EUR/JPY

The Euro (EUR) fell below 179.00 against the Japanese Yen (JPY) on Friday, after it failed to hold above 179.50, despite the positive move following Thursday's ECB meeting. A cautious market, driven by the ongoing crisis in the Middle East and anticipation of a higher interest rate by the Bank of Japan (BoJ) next week, is holding back EUR/JPY rallies. According to analysts at DBS Group Research, "it is almost a done deal that the Bank of Japan will hike rates at the upcoming meeting on Sep 17-18," citing a fundamental change in the policy environment. In their opinion, "the most likely scenario is for the BoJ to come out hawkish, delivering a 25bps rate hike and indicating a flexible pace of hikes going forward." Earlier today on Friday, Japanese data showed that factory prices remain elevated, reinforcing arguments for an immediate BoJ monetary tightening move. The Producer Price Index (PPI) results showed prices rose 7.6% year on year in August, down from 7.7% in July but higher than the 7.4% expected. The ECB increased the interest Rate on the Deposit Facility by 25 basis points to 2.5% as expected on Thursday, and President Christine Lagarde made it clear that the ECB would be considering further rate hikes because, according to her, inflation would stay above the target of 2% until "well into 2027." The Euro rose against its major rivals after Lagarde's press conference. The EUR/JPY currency pair is trading at 179.05, with the pullback from the 177.86 lows being a correction, as the daily Relative Strength Index (14) turns higher from extremely overbought readings, after falling almost 4% over the last two weeks. The MACD over the same period is comfortably below zero, signalling ongoing bearish pressure. Immediate support stands at the previously mentioned September 8 low of 177.86. Below that, support is unclear until the 127.2% Fibonacci extension of the September sell-off, around 175.60. For resistance, a rally would first test the July 31 high at 179.55, where bulls were held off on Thursday. Above that, the next resistance level is the September 4 high of 182.00.