With Thursday's session started, the EUR / JPY pair is attempting to rebound higher, with but gains did not exceed 122.23 at the time of writing. The pair tested yesterday's 121.57 support level, the lowest for more than 4 months. Overall, the Japanese Yen is still reaping more gains against other major currencies. A stronger-than-expected victory for anti-EU parties and policies as well as the continuation of the global trade war and its negative impact on the Eurozone economy will further support downward pressure on the pair's performance. On the daily chart below, it seems clear the opportunity for greater losses may push the pair to the 120.00 psychological support. Overall concerns about the consequences of worsening global trade tensions led by the United States and China will continue to be an important factor supporting the Yen’s continued gains as one of the most important safe haven for investors at time of uncertainty.
The performance of the Euro is under pressure from the continued slowdown of the Eurozone economy, led by Germany, as the global trade war continues.
The Japanese central bank kept the negative interest rate unchanged as expected and kept its accommodative monetary policy in place to support Japan's economy, which is facing the consequences of the global trade war. The European Central Bank (ECB), as expected, kept interest rates as is, and remains concerned that the Eurozone economy will continue to slow down, promising more stimulus if economic conditions worsen more than the current situation, especially if US trade wars continue.
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 is a bearish correction that will strengthen if it stabilizes below 123.00 support as shown on the daily chart below. The next support levels for the downside move will be 121.80, 120.95 and 120.00 respectively. In contrast, the nearest resistance levels are currently 123.30, 124.00 and 124.70, respectively. The general trend of the pair is bearish and the upward correction will not be stronger without the risk appetite and the return of confidence in the Euro.
On the economic data front, the pair is not expecting any important data from Japan or the Eurozone. The pair will monitor any developments in the Japanese yen's safe haven appeal if geopolitical concerns increase.