EUR/JPY softens towards 132.00 ahead of Eurozone inflation data on Wednesday

The EUR/JPY continues its slide down from Monday’s earlier test of the psychological resistance at 133.00.  It is now trading at around 132.13 down 0.35%

Wednesday will be an important day for the euro currency as Eurostat will release the Eurozone inflation data for the month of March. High volatility is expected as inflation is closely watched by the European Central Bank (ECB). It is a key indicator which determines interest rates decisions by policymakers. 

Earlier on Tuesday the ZEW Survey in the Eurozone and in Germany, which measures investors’ sentiment, disappointed market participants and the euro came under pressure, somewhat reminding traders of the negative sentiment surrounding the euro at the end of last week with the release of the rather dovish ECB meeting minutes. The ECB is worried about the trade war and the recent strengthening of the euro.

The US stocks´ indices are firing up on Tuesday and the general mood in the market is rather upbeat with also the US dollar staging a come back in early European trade. Gold is trading sideways and the market is choosing not to think about possible trade war escalations with China or diplomatic/economic sanctions with Russia. The yen is a safe-haven currency and the current pullback on the EUR/JPY towards 132.00 is mainly attributed to euro weakness and profit-taking. 

Low-tier data is coming up on the Japanese macroeconomic calendar at 23:50 GMT with import/export numbers and the Merchandise Trade Balance which is not expected to be a market mover.  

EUR/JPY 4-hour chart

The EUR/JPY is pulling back from the 133.00 figure. Supports lie at 132.11 and 131.37 swing lows while resistances are seen at the 132.50 and 133.00 figures.