Chart of the day - EURJPY (24.02.2023)

EURJPY has seen some moves today. Confirmation hearings from Kazuo Ueda, who is set to replace Kuroda as BoJ chief, provided JPY-volatility while the disappointing final release of German Q4 2022 GDP put pressure on EUR.

Remarks from Ueda have been quite interesting. While many hoped that he would tout a change in BoJ policy, namely a gradual exit from monetary easing, Ueda refrained from making big statements. He said that he sees inflation as peaking but unless there is a material improvement in inflation trends, yield curve control (YCC) will have to remain in place. However, he addressed calls for tweaking YCC saying that switching focus to a shorter-dated yields (down from current target 10-year yield) remains an option. However, the general feeling of his speech was that he wants to continue with monetary easing and the YCC started by his predecessor.

Revision of German data on Q4 2022 GDP was released today at 7:00 am GMT and turned out to be a disappointment. German GDP shrank by 0.4% QoQ in Q4 2022 (first release: -0.2% QoQ) while growth on an annual, working day adjusted basis reached 0.9% YoY (first release: 1.1% YoY). Poor showing of the German economy in Q4 2022 was driven by a 1% QoQ plunge in private consumption as well as 2.5% QoQ slump in capital investments. A 0.6% QoQ increase in government spending was not enough to offset drops elsewhere. 

Taking a look at EURJPY chart at F1 interval, we can see that the price has recently tested 144.00 resistance zone but failed to break above. A pullback was launched later on and EURJPY deepened drop during today's BoJ official hearings. However, bulls managed to fully recover from earlier declines, painting a bullish candlestick pattern near 142.60 swing level. Technical picture suggests that another test of the aforementioned 144.00 area may be looming.

Source: xStation5