Before the release of the German ZEW index results, the EUR/JPY pair is establishing bullishly on the resistance at 126.67, and for sessions tried to break above 126.78, on the confirmation by the two negotiating parties in resolving the fierce trade dispute between the US and China on the near final agreement to end the strongest trade war that threatens the future of global economic growth as a whole. The news increased investors' optimism for more risk appetite and the abandonment of safe havens, including the Japanese Yen, and thus the pair made gains.
The European Central Bank, as expected, maintained interest rates as is and remains concerned that the euro-zone economy will continue to slow down and promises more stimulus if economic conditions worsen more than the current situation, especially if US trade wars continue. Therefore, the euro did not receive any support from the announcement of the bank because it confirmed what was announced in the past.
The pair's daily chart shows attempts to correct the pair's upward correction, but in limited ranges due to weak investor confidence in the euro due to the slowdown of the Euro-Zone economy led by Germany. The pair did not take advantage of risk appetite well. In general, the weakness of the Japanese yen and risk appetite rather than the strength of the euro is what drives the pair to make gains.
European Central Bank President Mario Draghi announced that the ECB is ready to take further action to help the economy if expectations unexpectedly turn to the worst. Draghi said the bank would take "all necessary and appropriate monetary policy measures" in addition to the steps taken at its meeting on March 7, when it announced new cheap loans to banks and ruled out near rate hikes.
Technically: the recent EUR/JPY move has been trying to achieve upwards correction and will not succeed without moving the pair towards the psychological summit at 130.00 and getting established on top of it, and has currently reached the levels we expected in previous analyzes. The nearest resistance levels currently are 126.65, 127.30 and 128.45, respectively. On the downside, the nearest support levels for the pair are currently 125.50, 124.75 and 123.50, respectively.
On the economic front: the pair will watch the release of the German ZEW Economic Sentiment Index. Any developments in the safe haven assets let by the Japanese yen's will be watched if geopolitical concerns increase.
