EUR/JPY begins the ECB week on a firmer footage above 130.00
- EUR/JPY reverses Friday’s pullback from two-month high, mildly bid of late.
- Escalating chatters over reduction in ECB bond purchase propel Euro.
- Virus woes, downbeat S&P 500 Futures probe bulls around multi-day top.
- Light calendar, off in the US, Canada restrict market moves.
EUR/JPY eases from intraday high to 130.41 but prints around 0.10% daily gains during early Monday. The cross-currency pair took a U-turn from the highest levels since July 13 the previous day before the bulls took back the controls as the key week starts.
Although market sentiment remains sluggish, underpinning the Japanese yen’s safe-haven demand, the EUR/JPY pair remains firmer amid escalating chatters over the European Central Bank’s (ECB) hawkish play during this week’s monetary policy meeting.
The latest fundamentals from the bloc have been positive to the ECB hawks that have long pushed for dialing back the easy money policies. Recently, EU's commissioner Paolo Gentiloni said during the Ambrosetti Forum in Cernobbio, Italy that they are monitoring euro-area inflation, should monitor it very accurately, but without making conclusions too soon.
Read: ECB will be a critical event this week as US dollar looks into the abyss
On the other hand, wide criticism of Japan PM Yoshihide Suga and following readiness to resign from the Prime Minister’s post join the coronavirus concerns to weigh on the sentiment and favor the JPY bulls. While portraying the mood, S&P 500 Futures drop 0.20% intraday whereas Japan’s Nikkei 225 jumps 1.5% at the latest.
Moving on, the ECB chatters are likely to be the key driver for the EUR/JPY prices, which are expected to remain firmer. However, escalating COVID-19 woes and ECB disappointment may not hesitate from recalling the bears.
Technical analysis
Although a downside break of a two-week-old support line, now resistance around 130.55, favors EUR/JPY sellers, 100-day EMA near 130.15 precedes the 130.00 threshold to restrict short-term declines.