- BNP Paribas (based on Reuters)
The European single currency appreciated against the Japanese Yen last Friday, reaching its two-week high. However, ECB easing expectations earlier today weakened the Euro, and, as a result, the pair returned under the 125.00 level. The resistance level, represented by the monthly PP, also played its part in the EUR/JPY trend reversal. The cross now faces a support at 124.29, namely the weekly PP, which should limit the losses today. In case this support is breached, demand at the 124.00 psychological might be sufficient to keep the pair from falling deeper down. Technical indicators are also in favour of the bearish scenario.
Market sentiment shifted to the bearish side, as 52% of traders now hold short positions, compared to 50% on Friday.