On the route to a second weekly loss, EUR/JPY continues under pressure near a 13-day low.
Covid troubles in Japan, as well as rumors of no tapering at the ECB, have been weighing on the quotation recently.
Following mixed results from second-tier Japan data, market sentiment has remained gloomy despite a light calendar.
The issue will be the ECB’s decision; confirmation of cheap money policies could keep bears optimistic.
As markets in Tokyo open for Thursday’s trade, the EUR/JPY stays on the back foot for the fifth day in a row, down 0.05 percent around 130.50. The cross-currency pair decreased lately on Bloomberg news, indicating that the European Central Bank’s (ECB) cheap money policy is not in jeopardy. Coronavirus (COVID-19) troubles and indecision over the economy’s trajectory, as well as the important central bankers’ future activities, are also weighing on the quotation.
Bloomberg quotes unidentified officials familiar with the situation before of today’s special ECB meeting to affirm an upwardly revised 2.0 percent inflation target and policymakers’ willingness to accept the overshoot. Any signals of policy changes, which are generally supported by Germany and its allies, are ruled out.
Read more: ECB Official: Policymakers Agree to Raise Inflation Target to 2%, Allowing Overshoot – Bloomberg
In addition, in the midst of the covid renaissance, Japan plans to conduct an Olympics with no spectators. “With fewer than three weeks till the opening of the Olympics, the Tokyo metropolitan administration reported 920 new coronavirus cases Wednesday, marking the highest daily tally since May,” Kyodo News said.
The FOMC minutes, on the other hand, ruled out any immediate threat to monetary policy, although admitting inflation risk to the upside, keeping market mood optimistic.
In the midst of these bets, the S&P 500 Futures struggle to find a clear direction near the record high, while US 10-year Treasury rates remain depressed, hovering around the lowest level since late February.
It’s worth noting that the May Japan Current Account increased from JPY1820.4 billion to JPY1979.7 billion. During the month, however, the Trade Balance BOP Basis fell below the prior readout of JPY289.5 B.
In the coming weeks, EUR/JPY traders will be watching for ECB announcements to validate Bloomberg report, which, if confirmed, could keep the bears in control.
Sustained trading below the 100-day moving average, around 131.10, must overcome the 130.00 psychological barrier to keep EUR/JPY bears in control./n
