The EUR to JPY (EURJPY) has tumbled to the lowest level since July 17 as traders react to the messaging by the Bank of Japan and the European Central Bank (ECB). The pair is trading at 122.00, which is substantially below the October high of 125.
The BOJ and ECB all met yesterday and did what everyone was expecting. They both left their Covid-19 response tools unchanged and pledged to do whatever it took to cushion their economies. The ECB went further by hinting that it would possibly provide more stimulus in the December meeting. For its part, the BOJ decided to slash its outlook for the economy.
Earlier today, Japan’s statistics office released relatively strong economic numbers. The unemployment rate remained unchanged at 3.0% while the preliminary industrial production for September increased to 4.0%. That was a stronger performance than the previous increase of 1.0%. As expected, the Tokyo CPI dropped below zero.
Later today, the EURJPY price will react to the important economic data from the European Union. The key numbers to watch will be the European Union GDP numbers for the third quarter. Analysts polled by Reuters expect these numbers to show that the economy bounced back in the quarter.
The question is whether economic growth will continue in the fourth quarter as the number of Covid-19 continue rising. Other important numbers to watch today will be the Eurozone’s inflation numbers and German GDP data. On a positive note, according to sources, Germany will start vaccinating people by the end of the year.
EURJPY technical outlook
The four-hour chart shows that the EUR to JPY price formed a double top pattern at 125 in October. Since then, it has been in a strong downward trend and this week, it moved below the important support level at 122.36. The price remains below the 50-day and 25-day exponential moving averages.
It is also in the fifth wave of the Elliot wave, which means that the price could continue falling. If it does, the next support level to watch will be the psychological level of 120. On the flip side, a move above 123 will invalidate this trend. This price is slightly above the end of the fourth Elliot wave.