- Draghi opens the door for more rate cuts and prompts some aggressive selling around the Euro.
- The prevailing risk-off mood underpins the JPY’s safe-haven demand and adds to the pressure.
Having failed ahead of the 122.00 handle, the EUR/JPY cross witnessed a dramatic intraday turnaround and tumbled to 1-1/2 week lows in reaction in the last hour.
The shared currency came under some intense selling pressure after the ECB President Mario Draghi, speaking at the ECB Forum on Central Banking in Sintra, opened the doors for more rate cuts and said that negative rates have proven to be a very important tool.
Draghi further added that QE still has considerable headroom and indicators for the coming quarters point to lingering softness, clearly pointing to a shift to a more dovish bias moving forward and exerted some heavy pressure on the common currency.
The cross plunged to the 121.20-15 region and was further pressurized by the prevailing bid tone surrounding the safe-haven Japanese Yen, underpinned by rising geopolitical tensions in the Middle East and persistent US-China trade tensions.
Moving ahead, Tuesday’s economic docket features the release of German ZEW survey for June along with the final Euro-zone inflation figures for May, which will now be looked upon for some fresh impetus and grab some short-term trading opportunities.
Technical levels to watch
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