EUR/JPY storms through 114.00 on BOJ’s new measures

EUR/JPY witnessed extremely sharp moves and gunned down 114 handle, after the Japanese central bank made no changes to its interest rates, ETF purchases and bond buying programme, although introduced new policy measures to control the yield curve.

EUR/JPY shoots more-than 150-pips higher

The EUR/JPY pair rallies +0.84% at 114.38, eyeing for a test of 115 handle. The EUR/JPY cross fell as low as 112.60 on immediate reaction to the BOJ decision, as the yen gained on no rate cut from the central bank.

However, markets began to read through the BOJ statement in detail, with the JPY bulls giving up control on BOJ’s comments that it will continue to expand the monetary base until CPI exceeds 2%.

More so, BOJ adopted new policy measures for yield curve control along with QE, which sent the Japanese yields higher, in turn steepening the treasury yields and sending USD/JPY through the roof.

Meanwhile, moderate losses in the EUR/USD pair fail to impede the bullish momentum in the EUR/JPY cross. Although it cannot be said for how long it will sustain as the next big event for the fx markets remains the Fed rates decision.

EUR/JPY Levels to consider  

The pair has an immediate resistance at 114.88 (20-DMA) and from there to 115 (round figure). On the flip side, support is seen at 133.19 (daily S1) below which it could extend losses to towards 112.60 (post-BOJ low).