EURJPY, in contrast to EURUSD, has nudged modestly lower on the back of a moderate safe-haven bid whıch boosted Yen. This has drıfted the pair to the mid 117.50, nearing last week’s bottom and extending its action far away from the 20-day SMA but also significantly below the midline of the 2020 downchannel for a second consecutive day.
Yesterday’s high at 118.68 has so far remained unchallenged, while yesterday’s bottom has not broken yet to confirm the continuation of decline. Risk-off conditions prevailed, weighing on the pair, though the move lower may have been exacerbated by European holiday thinned markets. Now, however, the global markets are returning to full participation following the long weekends in many financial centres in Europe and Asia-Pacific.
Economic data has been a secondary consideration even as the reports begin to show the depth of the devastation wrought by the shuttering of the economy last month — the huge declines expected in activity have been realized, and then some. Last week, to some relief, European and Eurozone finance ministers finally managed to agree on a joint support package to address the immediate costs of measures designed to address the economic impact of the COVID-19 pandemic. There are now a number of states in the US and a number of countries in the Eurozone, including Spain and Italy, that looking at a phased reopening in economies.
Hence this is expected to keep the EUR in a choppy trading pattern in the near term between 117.30-117.93, unless sellers manage to direct a decisive move below 117.30. This could trigger March lows and a Lower Bollinger Band pattern at 116.11-116.40.
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Andria Pichidi
Market Analyst
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