EURJPY rebound from the three-year lows that hit in the early Asian session as investors shift their attention to safe-haven assets like the Japanese Yen. The 27 leaders of the European Union failed yesterday to agree on a relief package, and this weighs on euro.
The EU leaders agreed on the need for coronavirus relief package, but they assigned the EU Commission to search and propose a way to finance it. Markets didn’t like that the leaders kick the can further away as the economy needs support now as the coronavirus outbreak impact has destroyed manufacturing and services sectors across the continent. Christine Lagarde, President of the ECB, told heads of state that the economic downfall could reach 15% of GDP, and recent economic figures are gloomy.
The IFO Business Climate came in at 74.3 weaker than expectations of 86.1 for April. March reading was at 80.0.
In Japan, the February, all industry activity index came down to -0.6% below the expectations of -0.5%. Bank of Japan (BOJ) will announce its monetary policy decision on April 28. Analysts expect to keep rates unchanged at -0.1% and will continue to expand QE. The central bank is also expected to double purchases of corporate bonds and commercial paper.
EURJPY is 0.09 higher but remains at three-year lows with the technical picture pointing for more pain for euro. Only a break above 118 can cancel the bearish momentum.
On the upside first resistance for the pair stands at 116.25 the daily high. Above that resistance, the next supply zone will be met at 116.84 the high from yesterday’s trading session. If EURJPY clears that level, the next target would be at 117.42 the high from April 17.
On the flip side, the initial support stands at 115.54. To determine the next support area, we have to go back to April 2017 lows at 114.87.