EUR/JPY falls back towards 127.50

  • Risk aversion plus significant resistance above 128.50 saw EUR/JPY finally pull back towards 127.50.
  • An hawkish ECB meeting failed to offer the euro a lasting boost, with bears targeting weekly lows at 124.50.

As markets adopted a risk-off mood on Thursday, with global equities paring back some of Wednesday’s outsized gains amid concerns about the ongoing conflict in Ukraine and its potentially stagflationary global economic impact, the EUR/JPY He was also under pressure. The pair came within a few pips of reaching the 129.00 level earlier in the day, but has since pulled back to the 128.50 area, where it is trading down around 0.6%. A surprisingly aggressive ECB monetary policy decision in which the bank announced an end to net asset purchases sometime in the third quarter, a more aggressive line than many expected given the uncertainties related to the Ukraine war, supported momentarily to the euro.

This euro strength did not last, perhaps given Lagarde’s reluctance to talk about rate hikes, or perhaps because markets have a more optimistic view on the prospect of long-term monetary tightening amid possible stagflation in the coming months. . The ECB’s latest GDP forecast (a big downgrade in the GDP growth outlook for 2022 and a further improvement in the HICP inflation outlook) won’t exactly inspire confidence regarding the stagflation talk. Techs also got excited about a bearish technical set-up that has materialized nicely. After dipping below a long-term support trend line in early March, it took until this Thursday for the pair to pull back and test the support line once again.

The trend line (now resistance) coincided perfectly with the daily highs and bearish technicals have taken this as a bearish sign. If the drop in risk appetite extends into the coming sessions (very possible if there remains little progress in the Russia-Ukraine talks and commodities continue to rise), many will now point to a test of the recent lows at 124.45. .

Additional technical levels

EUR/JPY

Panorama
Last Price Today 127.53
Today’s Daily Change -0.68
Today’s Daily Change % -0.53
Today’s Daily Opening 128.21
Trends
20 Daily SMA 129.27
50 Daily SMA 129.88
100 Daily SMA 129.83
200 Daily SMA 130.14
levels
Previous Daily High 128.47
Previous Daily Minimum 126
Previous Maximum Weekly 129.78
Previous Weekly Minimum 125.07
Monthly Prior Maximum 133.15
Previous Monthly Minimum 127.92
Daily Fibonacci 38.2% 127.53
Daily Fibonacci 61.8% 126.95
Daily Pivot Point S1 126.65
Daily Pivot Point S2 125.1
Daily Pivot Point S3 124.19
Daily Pivot Point R1 129.11
Daily Pivot Point R2 130.02
Daily Pivot Point R3 131.58

Source: Fx Street

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