EUR/JPY: back above 115.00 amid thin liquidity

EUR/JPY is back above 115.00 handle after having dropped to a low of 114.48 amid thin volumes ahead of the Bank of Japan (BOJ) rate decision.

Algorithms behind the early drop

Yen surged for a brief moment across the board. The move was partly blamed on algorithmic traders. A quick recovery from the session lows highlights it is extremely volatile out there; more so because volumes are thin.

Markets expect BOJ to deliver big time, given the fiscal stimulus though strong on the headline (JPY 28 trillion) offers only about JPY 5 trillion worth of fresh spending. Thus, central bank is once again has to bore the burden of stimulating (weakening Yen) the economy.

EUR/JPY Technical Levels

The cross was last seen trading around 115.68 levels. A break above the daily high of 116.66 would expose 50-DMA at 117.74. A violation there could yield a rally to 120.00 levels. On the other hand, a breakdown of support at 115.00 would open doors for 113.33 (June 29 low) and 111.37 (June 27 low).