Chart of the day - EURJPY (28.07.2022)

FOMC decision yesterday was a key event of the week and now attention shifts to the second most important release of the week - US GDP report for Q2 2022. However, while this is unquestionably the top reading of the day, it is not the only one that is noteworthy. German CPI inflation figures for July will be released today at 1:00 pm BST. ECB has taken note of an increase in inflation and has even decided to deliver the first rate hike in more than a decade. Continued pick-up in price growth may be a decisive factor when it comes to rate decisions in September. So far, data from German states have been mixed - year-over-year price growth accelerated in North Rhine Westphalia and Bavaria while slowing in Hesse and Brandenburg. Market expects headline German reading to show a drop from 7.6% to 7.4% YoY, what would be a welcome development.

Taking a look at EURJPY chart at D1 interval, we can see that the pair has been underperforming recently. The most recent move lower was driven mostly by JPY strengthening rather than EUR weakening, with Japanese currency strengthening significantly amid more dovish Fed bets. A key near-term level to watch in case downward move deepens can be found at around 137.00, marked by the lower limit of the Overbalance structure.

Source: xStation5