EUR/JPY Price Forecast: Recovers strongly from 169.70 as BoJ holds interest rates steady

• EUR/JPY rebounds to near 170.80 as the Japanese Yen falls sharply.
• The BoJ held interest rates steady at 0.5% but kept the door open for more interest rate hikes.
• Investors await the Eurozone flash HICP data for July.

The EUR/JPY pair attracts significant bids around 169.70 and recovers to near 170.80 on Thursday. The cross snaps three-day losing streak as the Japanese Yen (JPY) weakens after the Bank of Japan (BoJ) left interest rates steady at 0.5%, as expected.

BoJ Governor Kazuo Ueda has left the door open for more interest rate hikes, in the press conference, citing that the underlying inflation "likely to stall but gradually accelerate". Ueda added that the Japan-United States (US) trade deal reduces "uncertainty over Japan's economic outlook", however, the impact of tariffs is yet to emerge. He further added that the BoJ wants to scrutinize, if tariffs impact "Japan's manufacturers and their wages".

Meanwhile, the Euro (EUR) gains on better-than-projected flash Q2 Gross Domestic Product (GDP) data released on Wednesday. In the second quarter of the year, the Eurozone economic growth came in at 0.1%, while it was expected to remain flat.

Going forward, investors will focus on the Eurozone preliminary Harmonized Index of Consumer Prices (HICP) data for July, which will be released on Friday. In Thursday's session, investors will monitor the inflation data of July from Germany, France, and Spain.

EUR/JPY bounces back strongly after attracting bids below 170.00. However, its near-term trend remains uncertain as its trades below the 20-day Exponential Moving Average (EMA), which is around 171.37.

The 14-day Relative Strength Index (RSI) oscillates inside the 40.00-60.00 range, indicating a sideways trend.

Going forward, the pair would witness more upside towards the July 2024 high of 175.43 if it breaks above the last week high of 173.25.

On the flip side, a downside move by the pair below the intraday low of 169.70 will push it lower to near the July 1 low of 168.46, followed by the June 19 low of 166.04.

EUR/JPY daily chart