EURJPY Outlook after ECB Update (17th March)

Fundamental Factors Affecting EURJPY

• ECB Rate Cuts Expected: Analysts forecast two more rate cuts in April and June, bringing the deposit rate to 2.0% but not lower.
• Government Spending Impact: Increased defense and infrastructure spending, particularly in Germany, could boost growth but fuel inflation, limiting further easing.
• Diverging ECB Views: Policymakers remain split—some warn of potential future hikes, while others see room for continued easing.
• Market Uncertainty: Rate cut expectations have softened, with some traders now pricing in a possible pause in April.
• Economic Growth Projections: According to ECB estimates, the eurozone is expected to grow 0.9% in 2025, 1.2% in 2026, and 1.5% in 2027.

Key Takeaway for Traders

While the ECB is still on track for two rate cuts, fiscal stimulus, and inflation concerns may limit further easing beyond 2025. Traders should watch for ECB statements and economic data, as shifting rate expectations could drive EURJPY fluctuations.

EURJPY – D1 Timeframe

The EURJPY rate on the daily timeframe chart is currently leaning on the rally-base-drop supply zone after an impulsive bearish move. The bearish array of the moving averages, coupled with the trendline resistance and the 76% Fibonacci retracement level, signals the likelihood of renewed bearish momentum.

EURJPY – H4 Timeframe

On the EURJPY 4-hour timeframe chart, we discover the elusive SBR (Sweep Break Retest) price action pattern. The supply zone is our major focus for the bearish continuation entry based on all the previously mentioned confluences.

Analyst’s Expectations: 

Direction: Bearish

Target- 156.859

Invalidation- 164.632

CONCLUSION

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