Forex: EUR/JPY spikes both ways on ECB rate cut, at 128.00

FXstreet.com (Barcelona) - The ECB interest rate decision was just announced and policymakers decided to cut the refi rate by 25bp to 0.50%, as expected. Draghi’s press conference is scheduled at 12:30 GMT. The EUR/JPY reacted with spikes in both ways, but having the 128.00 mark as epicenter.

A stroke to the upside during the European morning allowed the print of a session high at 128.29, but the EUR/JPY remains drawn to the 128.00 psychological level and has been trading under a narrow range this week, following last week’s profit taking from 130.67 high.

The EMU manufacturing PMI dropped slightly from 46.8 to 46.7, but analysts were expecting 46.5. The German figure eased from 49.0 to 48.3, instead of 47.9. The Italian number rose from 44.5 to 45.5, above 44.8 expected. The Spanish PMI came in higher, from 44.2 to 44.7 in April, beating 44.5 consensus. The Greek manufacturing figure rose from 42.1 to 45.

“The EUR/JPY is moving within a short-term declining channel. Supports can be found at 127.06 and 126.44. Hourly resistances are at 128.93 (01/05/2013 high) and 129.99 (intraday high)”, wrote MIG Bank analysts Bijoy Kar and Luc Luyet.