The EUR/JPY currency pair traded negatively around 184.95 during the early European session on Thursday, edging lower below the 185.00 mark [1]. This movement followed the release of Eurozone inflation data, which showed a larger-than-expected decline in June. According to Eurostat, the Harmonized Index of Consumer Prices (HICP) dropped to 2.8% year-on-year in June from 3.2% in May, coming in below the consensus estimate of 3.0% [1].
The softer inflation print has eased pressure on the European Central Bank (ECB) to raise interest rates at its next meeting scheduled for July 23 [1]. Morgan Stanley economists commented that the lower inflation could "lower the bar a touch for the ECB to be on hold in September," noting that energy pressures had a "limited" direct impact on eurozone prices [1]. Despite the inflation surprise, traders continue to anticipate the ECB will deliver another quarter-point rate rise by the end of this year, according to Morningstar [1].
From a technical perspective, EUR/JPY maintains a mildly bullish near-term tone, holding above the Bollinger Bands middle line and the 100-day moving average, with the Relative Strength Index (14) around 50, indicating balanced momentum and favoring range-bound gains rather than an impulsive breakout [1]. Immediate resistance is at the 185.00 psychological level, with further hurdles at 185.86 and 186.15, while initial support lies at 184.90 and 184.65, with deeper support at 183.65 [1].
CONCLUSION
EUR/JPY's decline below 185.00 reflects the market's reaction to softer-than-expected Eurozone inflation, which has reduced expectations for imminent ECB rate hikes. Despite the negative tone, technical indicators suggest a mildly bullish bias and potential for range-bound trading. The market remains attentive to upcoming ECB decisions and inflation trends.