EUR/JPY: recovered despite dovish ECB

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Jan 22, 2016.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

    Oct 7, 2015
    Likes Received:
    FXStreet (Guatemala) - EUR/JPY remains broadly consolidated in a range between 126.16 and 128.43. There was a brief sell off post the ECB as markets brace and prepare for the ECB to act as noting that December saw an acceleration of the slow down.

    However, the cross recovered as markets took it as risk positive. Analysts at Rabobank explained, "Risk appetite received a welcome fillip from the dulcet tones of ECB President Draghi yesterday. It is not often that a central bank manages to deliver a significant easing of monetary conditions through an as expected steady policy announcement but, through knocking the EUR significantly lower with promises of more policy stimulation Draghi managed just that. "

    EUR/JPY levels

    Karen Jones, chief analyst at FXStreet explained that EUR/JPY’s outlook is negative. "We no longer think that was a bearish pennant, given the price action. Nonetheless near term rallies are likely to struggle 128.50/128.94.This is the location of the short term downtrend and the 55 day ma, and while below here, the market should remain under pressure." Jones added, "The market has a 2013-2016 support line at 126.52 that needs to give way on a closing basis (this is now favoured). We also note the 126.08, 2015 low and consider this to be the break down point to the 121.87 50% retracement of the bull move from 2012."
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