The EUR/JPY cross pair looks bearish here, both from a technical and fundamental perspective. On the one hand, the technical picture reveals a downward channel and a head and shoulders pattern. On the other hand, the fundamental picture tells us that the ECB will increase the asset purchases under the PEPP program as suggested by the speeches held at the end of February by some of its members, Christine Lagarde included.
The euro looks weak at this point as Europe lags the United States and the United Kingdom in the vaccination race. The European leaders are now focused on how to restart the economies rather than on vaccinating as many people as possible.
Higher yields in the United States triggered higher yields in Europe too, but the financial conditions in the two regions differ. While the Fed has little or no room to maneuver, the ECB has plenty of space, and it will ease some more.
While in the falling channel, the EUR/JPY cross remains bearish. Currently, at the neckline of a head and shoulders, the price action may consolidate for a while until heading for the measured move. Bears may want to remain on the short side targeting 125 and having a stop at 129.35.
