2) EURJPY

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

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

• Resistance: 129.50, 130.00, 131.50
• Support: 128.00, 127.50, 127.30

Yesterday the currency pair was very volatile and extremely multidirectional, first shot up against the background of the ECB's decision, after at the beginning of the North American session, the currency pair fell down against the background of increased demand for protection. Risk sentiment dropped noticeably yesterday, global stock indices collapsed yesterday, financial flows moved into safe-haven currency. Santa Rally at its best. The value of the Fear-Greed indicator has slightly decreased and points to 31.

Part of the volatility was 'imported' from the United States, against the background of the freezing of the project of US President D. Biden, which at the moment reduced the risk appetite of large investors.
Everything else is generally stable. Omicron has yet to make the global economy sneeze, but it looks like it's because the world is tired of blockages and restrictions, not the virus itself. But do not forget about the fact that there is still no official position of the WHO, as well as the fact that in a number of countries the new Omicron strain has already become a 'leader'.
News from China began to cause concern again. Since the calm plan with debt restructuring is somehow delayed. Yesterday it became known that Chinese lenders are suing real estate giant Evergrande for more than $ 13 billion. The court accepted 367 claims against Evergrande.

With regard to policy decisions by central banks.
The European Central Bank announced a cautious cut yesterday, largely in line with market expectations. The ECB left rates unchanged and confirmed that the PEPP emergency procurement program will end in March 2022. The Government Council also decided to expand its APP Asset Purchase Program to € 40 billion per month in the second quarter and to € 30 billion in the third quarter. This was done to partially offset the end of the monthly purchase of € 60 billion of bonds through PEPP. Those. on the one hand, like the ECB starts talking about the normalization of monetary policy, as inflation rises, but on the other hand, such a maneuver is unlikely to help quickly cope with inflation. As many noted yesterday, the ECB will stop buying PEPP bonds and they will continue to buy APP bonds in hopes of fooling inflation.
ECB President Christine Lagarde acknowledged that inflation is likely to remain above 2% for most of 2022, noting that she also expects a significant rebound in growth next year.

Earlier in the day, Markit released preliminary estimates for the EU's December PMIs. The latest wave of coronavirus has left its mark on the German and EU economies, according to the official report, with the services PMI dropping to a 10-month low of 48.4 and the manufacturing index rising to a three-month high of 53.2. The EU services index fell to 53.3 and the manufacturing PMI exceeded expectations to 58.

The Bank of Japan announced its decision today. The Bank of Japan is leaving the policy unchanged and will decide whether to cut the stimulus measures under the QQE program only after March. It also allowed part of its emergency financing program for small and medium-sized businesses to be extended for an additional six months after the March 2022 deadline. The yield curve control policy remained unchanged by 8-1 votes, confirming its softest position among major central banks. The short-term target interest rate remains at -0.1%, and the yield on 10-year bonds is around 0%.

Today we are watching a very important indicator for the Eurozone, the EU Consumer Price Index (CPI) (YoY) (Nov) - 13:00 Moscow time - EUR

In terms of the prospects for the movement, we definitely follow all the news around the new strain-Omicron, since any negative will lead financial flows to the protective Yen, and positive, on the contrary, will undermine the demand for the Yen.

The fundamental picture, still more bullish than bearish, is solely responsible for the downward movement by the demand for protection. So it is possible that the currency pair will continue to experience pressure in the near future, but the mid-term estimate of the movement is upward, here is the position of the BoJ in relation to the national currency, plus the rather weak macro data from Japan and the definitely softer monetary policy of the BoJ.
While the market is at the level of 128.00, we suggest keeping the increased danger for trading the currency pair.

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