Euro steadies against the Yen after ECB lifts rates

After the European Central Bank raised its deposit rate by a quarter point to 2.50%, the Euro steadied against the Japanese Yen on Thursday. This decision came after a sharp decline of the cross over the past week, as it had fallen below the 179.00 mark. ECB President Christine Lagarde called the hike a "no-brainer" and attributed the upward move to revised inflation forecasts and the resilience of the Eurozone economy.

Although she did not commit to further rate hikes, she warned about potential gas price increases due to supply disruptions or a cold winter. Inflation in the Euro area stood at 3.3% in August, primarily driven by energy costs. Meanwhile, speculation that the Bank of Japan would raise rates in September, coupled with possible Japanese intervention, led to a rally in EUR/JPY over the past week.

Now, analysts are focusing on the Bank of Japan's upcoming meeting on September 18, which could either strengthen the Yen and pressure the cross or maintain the hawkish stance of the ECB. The EUR/JPY cross is currently trading at 179.38, which is above the 20-period Simple Moving Average (SMA) at 178.81 and below the 100-period SMA at 183.51.

Technical indicators suggest that bearish momentum has faded, but a decisive trend has not yet emerged. Immediate resistance lies at 179.46, while support is seen at 179.05, with a deeper pullback potentially targeting the prior lows around 178.78 and 178.54.