EUR/JPY drops on Yen demand & ECB speculation

Bid tone around Yen strengthened once in Asia, pushing EUR/JPY pair lower at a time when markets are speculating the ECB could lower threshold for bond purchases.

Trades below 5-DMA

At the time of writing, the cross was trading below the 5-DMA level of 116.84 levels. Yen is in demand after IMF published its bearish global growth forecasts yesterday. Still, the gains are under check due to Japan stimulus expectations.

Meanwhile, common currency is under pressure as markets expect the European Central Bank (ECB) to address the problem of availability of bonds for QE purchases by lowering the threshold for qualification.

EUR/JPY Technical Levels

A major support below 5-DMA is seen at 115.82 (50% Fibo of Brexit day drop), under which losses could be extended to 115.50 (June 16 low) and 115.23 (10-DMA). On the higher side, the cross needs to take out 117.30 (38.2% of Brexit day drop) to signal a possible rise to 117.78 (Tuesday’s high). A violation there could yield 118.81 (50-DMA).