A stronger-than-expected victory for the anti-EU parties and it policies, as well as the continuation of the global trade war and its negative impact on the Euro-Zone economy will further support downward pressure on the EUR/JPY, which is currently steady around support at 122.20 at the time of writing. On the daily chart below, it seems clear that the opportunity for greater losses may push it to 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 continued gains of the Japanese yen as one of the most important safe haven assets for investors at times of uncertainty.
The performance of the Euro is under pressure from the continued slowdown of the Euro-Zone 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 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 and the next support levels for the downside move will be 122.25 and 121.00 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 will be watching the release of the German consumer climate index (GFK) and cash supply in the Eurozone, and will monitor any developments in the Japanese yen's safe haven appeal if geopolitical concerns increase.
