EURJPY was rejected at key resistance level overnight as the ECB gave its strongest indication yet that it’s prepared to use unconventional instruments to prop up inflation. While the ECB didn’t announce any new measures this time around, the bank is clearly very open to the idea and another low inflation reading could force the bank’s hand.
Before the meeting, IMF Chief Lagarde implored the bank to immediately take action, with inflation in March rising a disappointing 0.5%. Draghi, however, brushed off this data, putting it down this year’s early Easter. (For a full rundown of last night’s ECB meeting see my colleague Kathleen Brooks’ report: Will the Easter Bunny bring QE to the ECB?).
Potential double-top in EURJPY
The euro took a bit hit on the back of Draghi’s comments, with EURUSD just holding above 1.3700 at the time of writing. Meanwhile, EURJPY was rejected by a long-term downward sloping trend line (see chart), which has created a potential double-top in price. With the fundamental supports crumbling under the euro and this recent technical weakness, EURJPY may be heading towards long-term trend line support and its 100-day SMA.
However, there is some concern that this potential EUR weakness will be weighed against possible JPY weakness, especially if the BoJ announces more stimulus measures. Also, if price breaks its long-term downward sloping trend line, it may negate the aforementioned bearish scenario. Yet, we think more stimulus from Tokyo may be a few months off, if at all, but ECB may ease at any time if we witness another weak inflation reading.
Source: FOREX.com
Recommended Content
Editors’ Picks
AUD/USD remains under pressure above 0.6400
AUD/USD managed to regain some composure and rebounded markedly from Tuesday’s YTD lows in the sub-0.6400 region ahead of the release of the Australian labour market report on Thursday.
EUR/USD faces decent contention around 1.0600
The knee-jerk in the Greenback reignited some buying interest in the risk complex and pushed EUR/USD to three-day highs near 1.0680, rapidly leaving behind the recent yearly low around 1.0600.
Gold eases despite risk-off mood
Gold trades in a relatively tight range near $2,390 in the second half of the day on Wednesday. In the absence of high-tier data releases, investors keep a close eye on headlines surrounding the Iran-Israel conflict.
Ethereum trades around the $3,000 support following a surge in validator queue
Ethereum (ETH) continued a sideways movement on Wednesday as investors seemed to be waiting for an upward or downward price catalyst. Despite the price stagnancy, the ETH validator queue - possibly fueled by the DeFi restaking boom - rose sharply.
Australia unemployment rate expected to rise back to 3.9% in March as February boost fades
Australia will publish its monthly employment report first thing Thursday. The Australian Bureau of Statistics is expected to announce the country added measly 7.2K new positions in March after the outstanding 116.5K jobs created in February.