EUR/JPY prints five-day downtrend around mid-130.00s ahead of ECB special meeting
- EUR/JPY remains pressured around 13-day low on the way to second weekly loss.
- Covid woes in Japan, chatters over no tapering at ECB weigh on the quote of late.
- Market sentiment remains subdued amid a light calendar following mixed prints of second-tier Japan data.
- ECB decision will be the key, confirmation of easy money policies could keep bears hopeful.
EUR/JPY remains on the back foot for the fifth consecutive day, down 0.05% around 130.50, as markets in Tokyo open for Thursday’s trading. The cross-currency pair recently dropped on Bloomberg news suggesting no threats to the European Central Bank’s (ECB) easy money policy. Also weighing on the quote are coronavirus (COVID-19) woes and indecision over the economic trajectory as well as the key central bankers’ future actions.
Ahead of today’s special ECB meeting, Bloomberg spots anonymous officials familiar with the matter to confirm an upwardly revised 2.0% inflation target and policymakers’ readiness to accept the overshoot. The same rules out any hints suggesting the policy adjustments, largely backed by Germany and friends.
Read: ECB Official: Policymakers agree to raise inflation goal to 2% and allow overshoot – Bloomberg
Additionally, Japan aims to hold Olympics with no spectators amid the covid resurgence. “The Tokyo metropolitan government reported 920 new coronavirus cases Wednesday, marking the highest daily figure since May, amid a resurgence of infections with less than three weeks to go until the start of the Olympics,” said Kyodo News.
On the contrary, the FOMC minutes ruled out any immediate threat to the monetary policy, despite accepting upside risk to inflation, which in turn kept market sentiment positive.
Amid these plays, S&P 500 Futures struggle for a clear direction near the record top whereas the US 10-year Treasury yields stay depressed around the lowest since late February.
It should be noted that the recently released Japan Current Account for May rose past ¥1820.4B to ¥1979.7 B. However, the Trade Balance BOP Basis dropped below ¥289.5 B previous readout during the stated month.
Looking forward, EUR/JPY traders will keep their eyes on the ECB announcements to confirm Bloomberg news, which if proved right could keep the bears on the driver’s seat.
Technical analysis
Sustained trading below 100-DMA, around 131.10, needs to conquer the 130.00 psychological magnet to keep EUR/JPY bears on the driver’s seat.
Author
Anil Panchal
FXStreet
Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.
