EUR/JPY: Rangleplay continues even as Germany announces hard lockdown

• EUR/JPY lacks a clear directional bias, trades within a sideways channel. 
• Germany announces a hard lockdown to counter the surge in coronavirus cases. 
• Other macro factors favor a bullish move in the EUR. 

EUR/JPY remains locked in a narrow range for the tenth straight day, with the bears remaining on the sidelines despite Germany’s decision to impose the economically painful hard lockdown restrictions over Christmas. 

The pair is currently trading near 126.10, representing marginal gains on the day, and has charted a sideways channel on the daily chart with the upside capped near 126.75 and downside restricted near 125.78. 

Germany’s hard lockdown will run from Dec. 16 to Jan. 10 and has been imposed to counter the rise in the number of coronavirus cases and deaths, which according to Chancellor Merkel, have been caused by Christmas shopping and a “considerable” increase in social contacts, as noted by BBC. 
So far, however, that has failed to invite selling pressure for the common currency. 

Analysts foresee expectations for global economic recovery, the fading influence of trade protectionism, economic nationalism, and the European Union’s agreement on the 2021 budget to keep the EUR better bid over the near-term – more so, if the Eurozone PMIs due this week show signs of economic recovery. 

A range breakout would open the doors to 127.50 (February 2019 high). Alternatively, a range breakdown could yield a drop to the psychological support of 125.00. 

Technical levels