This week brings several high-impact economic releases that could shape near-term currency volatility. On Thursday, the U.S. will publish its weekly unemployment claims, offering insight into labor market resilience. The focus then shifts to the UK GDP m/m data on Friday and Canada's employment change figures later that day — both likely to influence GBP and CAD sentiment.
Meanwhile, EURJPY has extended its bullish trajectory, gaining over 11% since late February. Technical indicators confirm strength, though signs of potential exhaustion suggest a pullback may be on the horizon. Traders will also be watching the July 20 Japanese elections and evolving eurozone economic trends for further direction.
With momentum intact but risks emerging, EURJPY remains a chart worth watching closely.
Overview
This week brings several high-impact economic releases that could shape near-term currency volatility. On Thursday, the U.S. will publish its weekly unemployment claims, offering insight into labor market resilience. The focus then shifts to the UK GDP m/m data on Friday and Canada's employment change figures later that day — both likely to influence GBP and CAD sentiment.
Meanwhile, EURJPY has extended its bullish trajectory, gaining over 11% since late February. Technical indicators confirm strength, though signs of potential exhaustion suggest a pullback may be on the horizon. Traders will also be watching the July 20 Japanese elections and evolving eurozone economic trends for further direction.
With momentum intact but risks emerging, EURJPY remains a chart worth watching closely.
Key Economic Events
Thursday 15:30 (GMT+3) – USA: Unemployment Claims (USD)
Friday 09:00 am (GMT+3) – UK: GDP m/m (GBP)
Friday 15:30 (GMT+3) – Canada: Employment Change (CAD)
Technical Analysis
Since establishing a low at 154.784 on February 28, EURJPY has advanced by over 11%, marking a notable bullish reversal. This upward movement has been underpinned by a technical confirmation in the form of a double EMA crossover, with price action remaining consistently above both the 20- and 50-period Exponential Moving Averages — a classic signal of sustained trend strength.
Momentum indicators continue to validate the bullish bias. The Momentum Oscillator remains firmly above the 100 threshold, indicating ongoing buying pressure, while the Relative Strength Index (RSI) remains above the 50 midline, reflecting positive momentum and the potential for further gains.
That said, emerging signs of negative divergence between price and the Momentum Oscillator, alongside the RSI entering the overbought territory, suggest a growing risk of short-term exhaustion. While the broader trend remains constructive, a pause or corrective pullback cannot be ruled out in the near term.
Potential Upside Targets
Should the bulls maintain market control, traders may direct their attention toward the four potential resistance levels below:
172.268: The initial resistance is 172.268, representing the daily high reached on July 9.
173.164: The second price target is identified at 173.164, corresponding to the weekly resistance, R3, calculated using the standard Pivot Points methodology.
176.019: The third target is established at 176.019.
178.572: An additional price target is estimated at 178.572, which corresponds to the 423.6% Fibonacci Extension drawn from 165.201 to 161.069.
Potential Downside Targets
Should the sellers take market control, traders may consider the four potential support levels listed below:
169.728: The first level of support is identified at 169.728, representing the weekly Pivot Point, PP, calculated using the standard methodology.
167.602: The second support level is identified at 167.602, corresponding to the daily high marked on June 17.
166.702: The third support level is 166.702, reflecting the weekly support, S3, estimated using the standard Pivot Points methodology.
165.201: An additional downward target is observed at 165.201, corresponding to the swing high from May 13.
Fundamentals
Japan's Prime Minister Shigeru Ishiba has kicked off a crucial election campaign that could determine his political future. Although his ruling coalition already holds a majority in the upper house, recent losses in other elections and falling approval ratings have put pressure on him to perform well in the July 20 vote.
The election comes as everyday Japanese are struggling with the rising cost of living, with inflation hitting a two-year high. Voters are divided between Ishiba's plan to hand out cash and opposition promises to cut sales taxes. If the ruling coalition loses too many seats, it could weaken Ishiba's leadership and increase political uncertainty.
Markets are watching closely. A win for Ishiba may bring stability, while a stronger opposition could lead to more government spending and put pressure on Japan's economy and currency.
On the other hand, the eurozone's economy showed signs of stabilizing in June, with a slight return to growth after nearly a year of contraction. This was mostly thanks to stronger performance in the services sector, especially in Germany and Spain. Germany saw a rebound in manufacturing, helping its economy grow for the first time in four months. Spain also continued to expand, though at a slower pace.
France and Italy, however, are still struggling. France's economy is shrinking more slowly, but business confidence is low after recent elections. Italy's factories had their worst month since December, and demand remains weak. Poland also had a tough month, with its manufacturing sector hitting a new low due to poor demand at home and abroad.
Overall, while some countries are improving, the eurozone's recovery remains fragile and uneven.
Conclusion
As markets brace for this week's key economic data, traders should remain alert to shifting sentiment across USD, GBP, and CAD pairs. While EURJPY continues to benefit from strong technical momentum and eurozone stabilization, signs of overextension warrant caution. Political developments in Japan and uneven growth across Europe add further layers of complexity. In the near term, a balanced approach—watching both upside targets and support zones—will be essential for navigating potential volatility.