The EUR still has some continued reasons for weakness as it increasingly looks like heading into a recession as PMIs on July 22 showed a steep drop below the market’s minimum expectations. In fact, since the PMI data points released on the 23rd of June printed below the market’s minimum expectation at 51.9 (for the composite Flash reading) there have been continued signs of a slowing eurozone.

This week the German IFO data came in below expectations this week and the spread between expectations and current conditions has widened. Also, the natural gas surge puts pressure on the eurozone as relentless energy price rises look set to continue.

This means that for the coming week it is reasonable to expect the EURJPY to find sellers on any rallies higher.

Major Trade Risks: The major risk here is if there is a shift in either the monetary policy outlook from either the ECB or the BoJ change.