EUR/JPY Waiting for the ECB Decision – Bearish While Below 134

Summary:

EUR/JPY looks bearish while trading below the 134 level and looks poised to break below 133 on renewed weakness. The ECB meeting is key.

The EUR/JPY cross pair is bearish while below the 134 level, where it met strong resistance. With only a few hours ahead of the ECB meeting and interest rate decision, the cross pair looks weak.

The European Central Bank faces a tough decision today. On the one hand, hawks within the Governing Council put pressure on a reduction in the PEPP program. This program was designed to ease the monetary policy further during the COVID-19 pandemic, in addition to the APP program or the Asset-Purchasing Programme.

Now, the ECB has a challenging task in finding the right way to communicate to market participants that it wants to reduce the PEPP but increase the APP as inflation remains subdued in the Euro area. Also, the staff projections are due today, with the focus being on the Euro area growth forecast. Given the United States’ growth and the spillovers to its trading partners, the chances are that the ECB staff will raise the outlook for economic growth. The question is – by how much?

EUR/JPY Technical Analysis

While below 134, the EUR/JPY cross remains weak. Bears may want to wait for a break and close below 133 before going short with a stop at 133.60 and a take profit at 130.