EUR/JPY: Euro hits 5-month low even with core inflation in the Eurozone ticking up
- The Eurozone core inflation accelerated to 1.2 y/y in February, up from 1.1% y/y in January.
- The Bank of Japan Governor Kuroda said the Bank will slow monetary easing once targets are met.
The EUR/JPY is being hammered as the pair is trading down at 130.88 down 0.30% on Wednesday, hitting fresh 5-month low, unable to materialize the pickup in core inflation in the Eurozone in February.
The Eurozone core inflation rose 1.2% over the year compared to 1.1% y/y expected by markets. Earlier on Wednesday, the French inflation reported slight deceleration to 1.4% over the year, while fourth-quarter GDP rose 0.6% Q/Q in France lifting the annual GDP to 2.0% y/y in 2017 compared to 1.1% in 2016. German unemployment fell 22K in February.
Overnight theBank of Japan Governor Kuroda crossed the wires saying that once the price target for inflation has been reached and the economy is stable the BoJ would not continue its aggressive monetary easing. The Yen did appreciate against the Euro and it is now trading at the 5-month low.
There is no major macro data coming up next for the Euro nor the Yen.
The next significant data for Yen is on Thursday with Tokyo core CPI expected to rise 1.4% over the year in February, up from the previous reading of 1.3% y/y.
The EUR/JPY is currently trading around 130.80. It is trading in a downtrend since February 1, 2018, and on Wednesday it has broken below its 200-period SMA on the daily chart. The 131.00 level has been broken to the downside. This is a 23.6% Fibonacci retracement from the July 2017-February 2018 bull run. The next support is seen 100 pips down at the big psychological figure 130.00. The 38.2% Fibonacci retracement from the same bull run mentioned above is likely to provide some support at the 128.00 psychological level. To the upside, resistance is seen at 132.00 figure and congestion level, further up 133.50 with the 100-period SMA should provide some solid resistance as well.
EUR/JPY daily chart
