EURJPY Breaking Out on BOJ Comments

JPY Falling FurtherThe Japanese Yen is weakening across early trading on Monday following the latest comments from BOJ governor Ueda today. Speaking a few hours ago, Ueda signalled that the prospect of negative rates being reversed this year was very low. While Ueda acknowledged that the bank had made progress in terms of bringing inflation sustainably to target, the BOJ chief noted that there was still a great deal of uncertainty in the outlook which means that monetary policy will stay as it is for now.Wage – Price Cycle Key for BOJThe key issue for the BOJ currently is determining whether a wage-price cycle will kick in to keep inflation supported. While Ueda noted that some positive developments had been made, he shared the concern of some at the BOJ that wage increases are typically harder to pass on to consumers than other increases such as raw materials costs.2024 JPY Bullish RisksFor now, JPY looks prone to further weakness. However, looking through year end, bullish risks look to be building. The BOJ recently adjusted its inflation forecasts firmly higher for the next fiscal year with CPI expected to hit 2.8%. As such, market pricing is now projecting a BOJ hike in H1 which should fuel a heavy bullish reversal in JPY.Technical ViewsEURJPYThe rally in EURJPY has seen the market trading up to test the underside of the broken bull channel. With momentum studies bullish, the focus is on a continuation higher while price holds above 159.71, targeting a challenge of the 162.29 level next. To the downside, 155.40 remains key support to watch. Notably, we have an active buy signal in the Signal Centre today, set below market at 159.60, reflecting a preference to buy dips.