EUR/JPY breaks below 118.00 on BOJ inaction

EUR/JPY has fallen sharply into fresh muulti-year lows sub 118.00 following the decision by the Bank of Japan to keep its policy unchanged, with the Central Bank extending its commentiment for an annual rise in monetary base at JPY 80trl, and the rate at -0.1%.

JPY strength post BOJ

The pair trades over 150 pips lower on the day, last quoted at 118.05, which adds to the 80-90 pips losses seen during this week, which has been characterized by 'risk-of' flows returning. Profit-taking and some bids around the 118.00 handle have now stalled the slide, with the risk clearly skewed for further downside. Market participants have interpreted the outcome of today's BOJ meeting as disappointing, judging by the rapid appreciation in the Japanese Yen.

EUR/JPY key levels

Having broken through 122.00 suppport area earlier this month, a level that represented the 50% fib retracement from the Abenomics-led rally, the next level of support for the pair is now found at 117.50 followed by 117.00 round number. It is worth noting that from a technical perspective, there is quite a substantial room for the pair to keep falling until levels as low as 111.00/112.00. On the upside, the pair will face immediate resistance at 118.50 ahead of 119.00.