EUR/JPY sees biggest single-day drop since Jan. 2

• Dovish ECB pushed both the EUR and Eurozone bond yields lower on Thursday.  
• EUR/JPY fell 1.18 percent, the biggest single-day loss since Jan. 2.
• An upbeat Japanese Q4 GDP released earlier could only aggravate the downfall.  

The EUR/JPY pair is on the defensive this Friday morning in Asia, having dropped by 1.18 percent yesterday – its biggest single-day drop in over two months.  

On Thursday, the European Central Bank (ECB) pushed out its first post-crisis rate hike to at least next year, announced cuts to growth and inflation projection and announced cheaper loans to shore up the economy.  

The dovish action confirmed market fears that the 17-nation currency bloc is heading toward a deeper economic slowdown.  

As a result, the German government bonds picked up a bid, with the 10-year yield falling seven basis points to 0.06 percent. The shared currency took a beating across the board.  

EUR/JPY fell to a three-week low of 124.67 and was last seen trading at 124.80.  

Looking forward, the ECB’s dovish turn will likely keep the EUR under pressure – more so, as Japan’s Cabinet Office has revised the annualized fourth-quarter GDP higher to 1.9 percent from the initial estimate of 1.4 percent.  

Further, risk sentiment may take a hit, pushing the anti-risk JPY higher, if China’s trade data, due for release in the next few hours, shows a sharp in both exports (global demand) and imports (domestic demand).  

Technical Levels