2) EURJPY

Technical Analysis (MA, RSI, STOCH, MACD, ADX)

• M30 - DOWN
• H1 - DOWN
• H4 - DOWN
• D1 - DOWN
• W1 - UP
• MN - UP

• Resistance: 133.00, 133.50, 134.10
• Support: 131.80, 131.30, 130.70

Yesterday the currency pair was very active and at the moment fell 95 pips down to the local support area of ​​131.50. Then she slightly won back the fall. The reason for such a sharp drop was described yesterday, China again, COVID again. The demand for risky assets is declining again. The market is still in the Risk-ON phase, the value of the Fear-Greed indicator has dropped to 63. As noted yesterday, it is very possible that we will see a couple of downward shots ahead against the background of impulses in demand for protection.

Let us briefly recall the fears in the market, here and COVID in China, yesterday a full lockdown was introduced in the large industrial metropolis of Lanzhou. Also, the real estate market in China is still in the spotlight.
In terms of macroeconomic news, neither Japan nor the EU released anything yesterday.

The only two central banks that are not even going to prepare the markets for an end to their emergency bailout programs are the Bank of Japan, which met this morning, and the European Central Bank, which are due to announce their decision later. No surprises expected.

The Bank of Japan (BoJ) has kept the QQE with its yield curve control policy unchanged, announced at its meeting today. Interest rate, as expected, unchanged -0.10%. Unlike other major economies, high inflation is not a problem in Japan. Moreover, the Bank of Japan has cut its growth and inflation forecasts and now expects inflation at 0.0% in fiscal 2021. It also means that the Bank of Japan will not rush to tighten policy anytime soon.

The near future in the context of Japan, this concept is very loose, historical reference The Bank of Japan has been trying unsuccessfully for several decades to accelerate higher inflation.

Next, we are waiting for the ECB. The ECB meeting today will probably not be impressive either. In September, the ECB announced that it was slowing the pace of its monthly PEPP bond purchase program over the next three months, which currently stands at € 80 billion per month. However, literally immediately within the framework of a press conference, President K. Lagarde clarified that this is not a reduction, but a recalibration, and if necessary, the ECB will return the volumes. Since the ECB representatives have repeatedly stated that the ECB will act immediately after the Fed, the focus of attention is shifting to the meeting in December. Within which there will be a broader discussion of its future.
However, Lagarde's comments at the post-meeting press conference may cause some volatility on all EUR-related currency pairs. If she insists that inflation is temporary and downplays recent gains, the euro could resume its decline. However, if it recognizes that inflation may remain high for longer, or there is a risk that price pressures will not ease quickly, we may see a significant rise in the EUR.

Tomorrow we expect an important publication on the EU, the level of consumer inflation for October, inflation is expected to rise to 3.7% on an annualized basis.

In terms of the prospects of movement, everything is unchanged. HOWEVER, it is very important to follow the press conference of K. Lagarde, her rhetoric today can greatly influence the movement of the couple!

Due to the market phase and fundamental background, the upward movement is more promising. The fundamental assessment speaks of an exclusively upward movement, which is supported by macroeconomic data from the EU and Japan, and the EU's success in recovering from COVID is years ahead of Japan. Plus the position of BoJ, which was recognized as a currency manipulator.
The downward movement is exclusively in the form of a downward correction. The reasons for the downward movement may be the increased demand for protection, the hawkish position of the BoJ tomorrow, or the dovish position of the ECB. However, in case of a breakdown of the 130.50 support level, the bulls may lose initiative.

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