EUR/JPY Tests 125 on BOJ News, Then Retreats

EUR/JPY Tests 125 on BOJ News, Then Retreats

22 April 2016, 07:27
Roberto Jacobs

EUR/JPY Tests 125 on BOJ News, Then Retreats

The cross in the EUR/JPY reversed losses and spiked almost 50-pips to the north after the yen slumped on the news that BOJ is reported to discuss negative-rates with banks.

EUR/JPY fades a knee-jerk spike

The EUR/JPY pair now rises 0.53% to 124.21, having rallied to 124.42 on the BOJ news. The EUR/JPY cross is seen reversing a brief upward rally, triggered by fresh reports from Bloomberg, citing that BOJ is expected to discuss lending to banks at negative rates. Markets are speculating that BOJ's Stimulating Bank Lending Facility, which now offers loans at 0%, would be the most likely vehicle for this option.

Moreover, a renewed bout of buying interest seen around the EUR/USD also contributed to the upside in the cross. Markets now await a string of manufacturing and services PMIs from the Euro area lined up release later in the EUR session for fresh impetus on the cross.

EUR/JPY Levels to consider

The pair has an immediate resistance at 124.95/125 (two-week tops/ round number) and from there to 125.50/55 (daily R2). On the flip side, support is seen at 123.41/37 (Daily & Apr 21 Low) below which it could extend losses to towards 122.97 (Apr 19 Low).


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