EUR/JPY maintains an upside bias above 127.80

Global stocks remain in focus following a turbulent week last week that concluded with a risk-off tone supporting the yen on Friday whereby Asian equities' heavy losses extended to Europe and US trade with a focus on the disappointing China Nov IP and retail sales data. 

For the week ahead, there will be a focus on the Fed with one eye on the BoJ as well. 

The Fed is expected to hike 25bp 

Fed will probably remove more of its forward guidance to increase its flexibility - Danske Bank

The Fed is expected to hike 25bp in December but to remove guidance,  while slightly reducing the near-term dots. There is likely to be an emphasis on a data dependent and risk management approach." Chair Powell will try to soothe markets by stressing that the Fed wants to extend the business cycle and thus will proceed slowly and deliberately. We expect a modestly dovish market reaction," analysts at TD Securities argued,

On the BoJ, the analysts explained that the central bank should close the year out with a whimper. "With no accompanying Outlook Report, there is not much for the Bank to dwell on or base a shift in stance with YCC flexibility nearly 6-months in. Since this change, the bond dealer survey continues to show very modest improvement in bond market functioning."

EUR/JPY levels

Analysts at Commerzbank explained that EUR/JPY maintains an upside bias while above the 4-month support line at 127.80 and they look for further gains. "The initial target is the 200-DMA at 129.71, but to reassert upside pressure the market will need to overcome the 130.15 7th November high. This will target 131.98 17th July high then the 133.12/13 highs from September."