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  • EUR/JPY comes under downside pressure near 118.40.
  • The cross met resistance in the 118.80 area today.
  • Markets’ focus now on the ECB gathering on Thursday.

The now offered bias around the European currency is weighing on sentiment and dragging EUR/JPY to the 118.40 region, giving away initial gains.

EUR/JPY cautious ahead of ECB

The cross is fading part of the recent advance to fresh 4-week peaks in the 118.80 region in response to some renewed weakness around the single currency and a better mood around the Japanese safe haven.

In fact, EUR is expected to navigate within a tight range ahead of the critical ECB gathering on Thursday, when the central bank is expected to unveil a package of looser monetary measures in order to boost inflation in the region and fight the ongoing slowdown.

Other than the ECB gathering, investors will also closely follow the publication of US inflation figures for the month of August ahead of the key FOMC meeting next week. It is worth recalling that the probability of another 25 bps ‘insurance cut’ by the Fed is around 93% according to ‘CME Fedwatch Tool’.

EUR/JPY relevant levels

At the moment the cross is advancing 0.01% at 118.47 and faces the next up barrier at 118.76 (high Sep.10) seconded by 119.58 (high Aug.13) and then 119.65 (55-day SMA). On the other hand, a breach of 115.86 (2019 low Sep.3) would open the door to 114.85 (2017 low Apr.17) and finally 113.71 (monthly low Nov.9 2016).