Eurozone Growth Signals
Japan’s National CPI rose 1.3% year-on-year in February, down from 1.5%. Core inflation excluding fresh food eased to 1.6% from 2.0%, below the Bank of Japan’s 2% target. Policymakers said they may raise rates if the economy and prices move as expected. They reiterated that policy aims to deliver 2% inflation in a stable and sustainable way. Technically, price remains above the 20-period and 100-period SMAs around the mid-183.00s. The RSI is 59, pointing higher without being overbought. Support levels are 184.06, then 183.82 and 183.67. Resistance is seen above 184.10, while the bias remains slightly bullish above 183.67.Cross Market Outlook
Given the current date of March 24, 2026, we are observing a classic divergence in economic signals for the EUR/JPY pair. The Eurozone’s composite PMI data shows a notable economic slowdown, dropping to 50.5, a sharp contrast to the healthier average of 52.3 we saw in the final quarter of 2025. This weakening momentum will likely limit the European Central Bank’s ability to sound hawkish, capping the Euro’s upside potential. On the other side, the Japanese inflation data is arguably the more powerful driver for this currency cross right now. With core CPI falling back to 1.6%, the Bank of Japan’s path to normalizing interest rates is significantly complicated, especially after inflation had finally held above 2% for most of the second half of 2025. This data forces the BoJ to remain accommodative, which is fundamentally bearish for the Japanese Yen. This creates a scenario where the Yen’s potential weakness may outweigh the Euro’s, pushing the EUR/JPY pair higher despite the poor Eurozone data. The technical picture supports this view, with the price holding firmly above the 183.67 support level. We should therefore consider strategies that benefit from a slow grind upwards rather than a sharp breakout. For derivative traders, this suggests that selling out-of-the-money puts on EUR/JPY could be an effective strategy to collect premium, capitalizing on the strong support levels and the expectation that the BoJ’s dovish stance will prevent a sharp downturn. Alternatively, purchasing long-dated call options allows us to participate in the gradual uptrend while defining our risk. The key is to position for continued Yen weakness being the dominant market theme in the weeks ahead. Create your live VT Markets account and start trading now.
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