The price of EURJPY fell over 500 pips today as the markets moved to a risk off environment amid banking fears globally. The question now rests with the ECB and will they hike rates by 50 basis points in tomorrow’s meeting?
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The price of EURJPY fell over 500 pips today as fear over American and European banks’ stability grows. Switzerland’s second largest bank Credit Suisse stock price fell over 25% today, after its largest shareholder Saudi National Bank, said it would not buy shares to support the bank. This would bring their stake above 10% which comes with regulatory restrictions.
Germany’s 10-year government bond yield has dropped below 2.2%, as investors look for safety ahead of the ECB monetary policy outlook. The European Central Bank is forecast to hike rates by 50 basis points which could put further pressure on the European banking sector.
Some banks have called for the ECB not to hike interest rates further, but the ECB’s credibility will be in question, if they were not to follow through with their planned hike. President Largade could hike by 25 basis points instead and provide a further outlook for a pause in rates to try and calm the markets.
The Federal Reserve is likely to wait to see how the market reacts to the ECb news; they will now likely stick to the 25 basis points hike or even pause in the next meeting to assess the possible impact of hiking rates further.
The price on the chart has traded through multiple technical levels and some observations included:
- EURJPY has fallen over 500 pips today.
- Price found resistance around 145.00 and traded down to the lows of 139.50.
- Price has traded outside of a bullish channel support.
- Price is trading below the daily 200 moving average.
- Support of 139.50 or 139.75 is being held currently.
- A break below this support could lead to a move towards 138.00 or 136.00.
- Price could find resistance again if it were to retest the lows of 141.50.
Have you watched our EURUSD analysis? You can see it here.
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