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EUR/JPY is currently trading with a bearish bias at 123.16 between a session’s range of 123.02 and 123.19 so far. 

The themes in play are supporting a bid on the yen while investors move to the sidelines ahead of today’s Federal Reserve meeting and while there are slimming expectations of a US rescue deal which weighs on risk sentiment and the greenback.

However, there was a technical bid on the DXY and consequently, EUR/USD chopped down 30 pips overnight while the USD/JPY fell from 105.65 to 104.96 – a fresh low since March on falling equities.

Looking ahead, analysts at Westpac explain that yhe FOMC is expected to hold fire after today’s meeting, but markets will be watching the post-meeting press conference closely for comment on risks and options for further easing.

Many forecasters expect a change in forward guidance on rates at the September meeting.

All eyes to the Fed

Meanwhile, the US Federal Reserve announced an extension of most of its emergency lending measures, which were due to expire around 30 September, until year-end, with the exception of their Commercial Paper Funding Facility extended to March 2021, the analysts explained.

“The three-month extension will facilitate planning by potential facility participants and provide certainty that the facilities will continue to be available to help the economy recover from the Covid-19 pandemic,” the Fed statement said. Since mid-March, the Fed has started nine emergency programs aimed at pumping liquidity into short-term credit markets and extending credit to businesses and local governments affected by the economic fallout from COVID.

EUR/JPY levels

EUR/JPY is sitting just below the June high at 124.43 and the 200-week ma at 124.80. On a nearer-term analysis, we see the price entering a symmetrical triangle on the 15 min charts as an hourly bearish impulse corrects to a 38.2% Fibonacci retracement level.

This equates to a bearish bias on a break of the triangle and bears will look towards a 3-month uptrend at 121.80.