EUR/JPY surges to the highest level since mid-January post-ECB
- The shared currency rallied across the board after the ECB policy decision.
- The ECB expands the PEPP by €600 billion as against €500 billion expected.
- Worsening US-China relations might benefit the safe-haven JPY and cap gains.
The EUR/JPY cross rallied over 80-90 pips from sub-1.2200 levels and jumped to over 4 1/2-month tops in reaction to the latest ECB monetary policy update.
The shared currency regained some strong positive traction after the European Central Bank decided to expand the size of its Pandemic Emergency Purchase Programme (PEPP) by €600 billion. The increase in the size of the PEPP was higher than €500 billion expected by the market participants and provided a goodish lift to the euro pairs.
This comes on the back of a mildly softer tone surrounding the Japanese yen, which remained supportive of the EUR/JPY pair's sharp spike to the highest level since mid-January. However, concerns about worsening US-China relations might benefit the JPY's safe-haven status and might keep a lid on any strong gains for the cross.
Moving ahead, market participants now look forward to the ECB's updated economic projections, which will be followed by the post-meeting press conference. The ECB President Christine Lagarde's comments will play a key role in influencing the near-term sentiment surrounding the common currency and help determine the next leg of a directional move.
Technical levels to watch
Author
Haresh Menghani
FXStreet
Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.
