EUR/JPY crashes below the 134 handle on ECB dovish looking taper

• ECB outcome as expected with a dovish taper from the current EUR 60bln to EUR30B per month from Jan To Sept 2018.
• Divergence between ECB and the Fed weighing on the euro
• EUR/JPY still in bullish territory according to analysts at Commerzbank on their daily techncial outlook for the cross.

As expected, the ECB will extend its bond-buying at EUR30B per month from Jan To Sept 2018, while leaving rates on hold. the taper is a dovish taper from the current EUR 60bln per month and it is weighing on the euro considering the divergence between the Fed and ECB - That divergence will continue to widen for the foreseeable future. Currently, EUR/JPY is trading at 133.71, down -0.49% on the day, having posted a daily high at 134.52 and low at 133.63.

• Main refi rate 0.00% as prev
• MLF  0.25% as prev
• Depo facilty rate -0.4% as prev

The most contentious debate at Thursday's meeting was going to be whether the ECB declares that the economy has recovered enough to draw QE to a close sometime in 2018- However, few expect that inflation will hit this target any time soon. From January 2018 the net asset purchases are intended to continue at a monthly pace of €30 billion until the end of September 2018, or beyond, if necessary, and in any case, until the Governing Council sees a sustained adjustment in the path of inflation consistent with its inflation aim.

• ECB starts gentle exit - ING

We now await President Draghi of the ECB who will comment on the considerations underlying these decisions at a press conference starting at 14:30 CET today.

EUR/JPY levels

While the cross has dipped below the 134 handle on the first stage of this two-stage risk meeting for markets as we await Draghi's presser, the cross has not fallen enough to shake off the bullish technical alignment on the daily charts, according to analysts at Commerzbank:

"It is immediately bid above the 20 day ma at 132.93, below here lies good support at 131.75/68. It is where the last month’s lows were made and the 55 day moving average at 131.54 can also be found in this vicinity."