Market commentators cited dovish ECB speak and concerns about the worsening pandemic situation in the Eurozone as key drivers of Monday’s underperformance in the euro. In terms of the former, ECB officials, including President Christine Lagarde and Vice President de Guindoes, doubled down on the insistence that favourable financing conditions must be maintained in the Eurozone to support the economic recovery. ECB officials also continue to see inflationary pressures as transitory. Meanwhile, the Netherlands started a three-week lockdown at the weekend, Austria is imposing a lockdown on the unvaccinated and infection rates in Germany are at a record high.

BULLISH AND BEARISH CONDITIONS/ POSSIBILITIES : (TECHNICALS)

Amid a bout of broad euro weakness, EUR/JPY has seen significant selling pressure on the first trading day of the week, falling from around the 130.40 area and close to its 200DMA to current levels under 130.00. The pair is set to end Monday’s session 0.3% lower, which would mark a fifth consecutive session in the red and seventh negative session in the last eight. Over this time period (the last eight sessions), the pair has dropped around 2.0% from above 132.50 to current levels under 130.00.

EUR/JPY has now convincingly lost grip of its 200DMAat 130.50 and also broke below a key Fibonacci retracement at just above 130.00 (the 61.8% retracement back from the October high at 13350 to the summer lows at 1.2800). Technically speaking then, recent losses have opened the door to an extension of downside towards those summer lows.

EURJPY regains territory above ichimoku cloud

Nov 16 2021