EUR/JPY: risk aversion fuels bear's appetite - FXStreet

Valeria Bednarik, chief analyst at FXStreet explained that the EUR/JPY pair plummeted to 115.49, level last seen in January 2013, after the Bank of Japan decided to leave its economic policy unchanged, giving no signs of being concerned over the economic situation or the poor performance of inflation, but probably worried about the uncertainty surrounding the Brexit referendum.

Key Quotes:

"Risk aversion fueled the demand for the safe-haven currency during European trading hours, as the common currency eased against the greenback. The pair bounced almost 200 pips on a turnaround in sentiment, but remains within 3 and a half years´ lows."

"Short term, the recovery seems mostly corrective, as in the 1 hour chart, the technical indicators came back from extreme oversold territory, and while heading higher, are still below their mid-lines. In the same chart, the 100 SMA has extended its decline above the current level, to provide a strong resistance around 118.90."

"In the 4 hours chart, technical indicators have also bounced from oversold territory, but remain well below their mid-lines, whilst the price is far below its moving averages, reflecting the latest yen's strength."