The Euro (EUR) advanced against the Japanese Yen (JPY) for the third consecutive day on Monday, driven by disappointing Japanese GDP figures that weighed on the Yen. The EUR/JPY pair traded around 184.50 at the time of reporting, having breached the 50% retracement of the late July sell-off, with the 185.00 resistance area now in focus for bullish traders [1].
Japan's Cabinet Office reported that the country's economic growth slowed to 0.3% in the second quarter, missing the market consensus of 0.5%. On a year-on-year basis, GDP growth decelerated to 1.1%, down from 1.8% in the previous quarter and below the 2.0% rise anticipated by analysts [1]. Economists at Brown Brothers Harriman highlighted that private consumption was flat and private non-residential investment subtracted -0.2 percentage points from growth. They noted that sluggish domestic demand is unlikely to alleviate Japan's fiscal concerns, which remains a significant headwind for the Yen [1].
Technical analysis indicates that EUR/JPY is in a bullish trend, trading at 184.54 and holding above an ascending trendline from late July lows. Momentum indicators such as the daily RSI (around 52) and a positive MACD suggest growing upside traction. Key resistance levels are identified between the 61.8% Fibonacci retracement at 184.82 and the July 31 high at 185.17, with the next upside target near 186.00. On the downside, immediate support lies just under 184.00 at the confluence of the 200-day SMA and the 50% retracement, with further support at 183.15 [1].
Market data shows that the Japanese Yen was generally weaker against major currencies, with the exception of the US Dollar, where it showed relative strength. The EUR/JPY pair's movement reflects this broader trend of Yen weakness following the GDP release [1].
CONCLUSION
Weaker-than-expected Japanese GDP data has pressured the Yen, allowing the Euro to extend its gains and approach key resistance levels. Technical indicators and analyst commentary suggest continued bullish momentum for EUR/JPY, with market participants closely watching the 185.00 area for potential breakout or reversal signals.