EUR/JPY has been nudging higher on Thursday, with the euro outperforming in the G10 space as traders cite short-covering after its recent period of pandemic-related underperformance. The pair is currently trading slightly in the green in the 129.30s, but has run into resistance for a third day running in the 129.50 area.
Failure to break above a key short-term area of resistance this Thursday is not really too surprising given thin liquidity conditions on account of US markets being shut for the Thanksgiving holiday. When volumes come back next week, that is when technical breakouts are going to become more likely.
Focus in the Eurozone remains on the broad trend towards tighter lockdown restrictions, with Italy the latest to unveil curbs on the unvaccinated. This likely isn't helping the euro, though a lot of bad pandemic-related news is now arguably in the price.
Thursday morning saw a slightly larger than expected drop in GfK’s December German Consumer Climate index to -1.6 from 1.0 in November, versus an expected drop to -0.5. Survey data is likely to weaken/remain weak in the coming months as the pandemic situation worsens into the year’s end.
Looking ahead to the rest of the session, the ECB releases the minutes of its latest policy meeting at 1230GMT. There is then a speech from ECB President Christine Lagarde at 1330GMT. After that, the calendar is empty and markets are set to be quiet.
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