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EUR/JPY‘s longer-term uptrend seems to be on shaking footing at moment, and it’s possible that the upcoming monetary policy statement from the European Central Bank could solidify that change.

Before moving on, ICYMI, today’s Daily U.S. Session Watchlist looked at GBP/CAD ahead of the Bank of Canada monetary policy statement, so be sure to check that out to see if there is still a potential play!

Intermarket Update:

Equity Markets Bond Yields Commodities & Crypto
DAX: 15581.14 -0.38%
FTSE: 7081.01 -0.20%
S&P 500: 4219.55 -0.18%
NASDAQ: 13911.75 -0.09%
US 10-YR: 1.489% -0.039
Bund 10-YR: -0.248% -0.001
UK 10-YR: 0.737% +0.004
JPN 10-YR: 0.075% +0.00
Oil: 69.72 -0.47%
Gold: 1,891.80 -0.13%
Bitcoin: $36,258.25 +10.05%
Ethereum: $2,565.03 +2.36%

Fresh Market Headlines & Economic Data:

Dow ends session 150 points lower for its third straight day of losses

Surprise jump in U.S. wages gives inflation debate a new twist

U.S. wholesale inventories rise solidly; supply constraints loom

German Trade Balance in April 2021: 15.5 billion euros

Upcoming Potential Catalysts on the Economic Calendar

Japan PPI at 11:50 pm GMT
Australia Consumer Inflation Expectations at 1:00 am (Jun. 10)
France Private Non-Farm Payrolls at 5:30 am (Jun. 10)
France Industrial Production at 6:45 am (Jun. 10)
Italy Industrial Production at 8:00 am (Jun. 10)
Bundesbank Balz speech at 9:45 am (Jun. 10)
European Central Bank Monetary Policy Statement at 11:45 am (Jun. 10)

What to Watch: EUR/JPY

EUR/JPY 1-Hour Forex Chart
EUR/JPY 1-Hour Forex Chart

On the one-hour chart above of EUR/JPY, we can see the pair is currently bouncing higher after a two-day downturn at the end of last week. With the market now hitting the Fibonacci retracement area of that move / the consolidation lows, traders are likely asking whether or not this is a short-term top in the works.

The answer to that is likely dependent on the upcoming monetary policy statement from the European Central Bank, hitting the wires at 11:45 am GMT on Thursday, just before the U.S. session opens. Expectations are for the ECB to hold off on any monetary policy changes as the sustainability of recent positive developments on the economic / pandemic fronts is still in question.

For traders, if the ECB sounds overly optimistic on their outlook on growth /inflation AND the hint at tapering in 2021, then the euro could see a round of short-term buying pressure during the Thursday trading session. That would turn the 61% Fib / broken support area above into an upside breakout signal and break-n-retest long setup around the 133.65 handle.

And vice versa, if the ECB sounds dovish in their future growth/inflation outlook, and or fears that cases may rise again due to COVID variants, then that Fibonacci setup still holds and we’ll be on the lookout for bearish reversal patterns for a potential move back to the previous swing low just below the 133.00 handle.