EUR/JPY trades in negative territory near 118.50
- Shared currency struggles to find demand on Wednesday.
- European Central Bank is expected to cut its policy rate tomorrow.
- Bank of Japan is said to debate additional easing next week.
The EUR/JPY pair rose above the 119 mark for the first time since mid-August during the Asian trading hours but reversed its course and lost more than 50 pips from its highs. As of writing, the pair was trading at 118.51, losing 0.2% on a daily basis.
The upbeat market sentiment after China's Finance Ministry published a list of US imports that will be exempt from the retaliatory tariffs today made it difficult for the safe-haven JPY to gather strength against its major rivals.
Eyes on ECB
However, the shared currency came under renewed bearish pressure in the second half of the day as investors started to reposition themselves ahead of tomorrow's critical European Central Bank meeting. Previewing this event, "we continue to see the ECB starting a final monetary firework at this week’s meeting: a 20bp rate cut of the deposit rate, a small tiering system, a repricing of the TLTROs and a restart of QE with some 30 billion euro per month," ING analysts said.
"Even though there is the risk that the hawks’ opposition could lead to a delay of QE.”
On the other hand, Reuters yesterday reported that the Bank of Japan policymakers were less confident about an early pickup in global growth and that they may be more open to debating additional easing next week, limiting the JPY's gains on the possibility of the BoJ opting out for an aggressive dovish policy change.
Technical levels to watch for