EUR/JPY: Euro trading lower amid European political uncertainties.

• Italian election resulting in a political gridlock.

• EUR/JPY trading below its 200- period simple moving average

The EUR/JPY is currently trading at 129.70 down 0.5%. 

Over the weekend, the Italian parliamentary elections saw the eurosceptic, anti-establishment Five Star Movement and Northern League getting the most percentage votes and this could result in a coalition which is essentially formed by ‘Populist eurosceptics’ according to BBC Europe editor Katya Adler. It may take weeks of negotiations to form a government and a coalition resulting for now in a political deadlock.

On the macroeconomic front, the Eurozone key event of the week is the ECB meeting scheduled on Thursday.

On Monday the German services PMI is expected at 55.3 in February.  
The Eurozone composite PMI which tracks both manufacturing and services is expected to remain unchanged at 57.5 in February.

The key event ifor Japan is on Thursday and Friday with the Bank of Japan meeting The market participants are awaiting any hints on quantitative easing after Governor Kuroda announced last week he might end stimulus in fiscal year 2019. 

Technically on the daily chart the EUR/JPY has broken below its 200-simple moving average last week and it is considered a bearish signal. The next major support is seen at 126.90 which is the 38.2% Fibonacci retracement from the June 2017-February 2018 bull run. Intermediary support is seen at the 128.00 figure, this level being also a previous cyclical low. To the upside resistance is found at the 131.00 figure which is a confluence zone with the 200-simple moving average and the 23.6% Fibonacci retracement from the June 2017-February 2018 bull run. Further up resistance is seen at 133.50 with the 100-simple moving average and historical supply/demand zone. 

EUR/JPY daily chart