- EUR/JPY hovers around the 121.00 neighbourhood on Wednesday.
- German flash inflation figures coming up next.
- The Fed is expected to reduce the FFTR by 25 bps later today.
EUR/JPY is trading within an unusual tight range in the 121.00 region following quite a volatile session in the single currency and a steady march in the Japanese safe haven.
EUR/JPY now looks to FOMC, BoJ
The cross is thus extending the sideline theme in the upper end of the recent range, trading at shouting distance from monthly highs in the 121.50 region.
In the meantime, there is no significant news on the US-China trade front following the ‘Phase One’ deal clinched earlier in the month and expected to be signed at some point in early November in Chile.
On the other key front, the UK will hold elections in December following Tuesday’s favourable vote in the House of Commons. In the same line, the House of Lords is expected to pass the elections bill later today.
In the docket, EUR posted no reaction despite the German labour market report came in on a weak note earlier in the day. Later, the key advanced inflation figures in Germany are expected to grab more attention.
In the European evening, the FOMC is expected to reduce the FFTR by 25 bps, although the focus of interest will be on Chief Powell’s press conference and the Committee’s views on the economic outlook and the forward guidance.
Early on Thursday, the BoJ meeting is expected to be a non-event, as investors expect Governor Kuroda to keep the ultra loose monetary stance unchanged once again.
EUR/JPY relevant levels
At the moment the cross is losing 0.03% at 120.96 and a breach of 119.68 (100-day SMA) would expose 118.67 (55-day SMA) and finally 117.07 (monthly low Oct.3/7). On the upside, the initial hurdle is located at 121.35 (monthly high Oct.17) seconded by 122.12 (200-day SMA) and then 123.35 (monthly high Jul.1).
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