EUR/JPY strengthens as JGBs slide ahead of Abe stimulus announcement

Offered tone around Yen picked up pace as Japanese government bond yield jumped, pushing the EUR/JPY cross higher to 114.81 levels.

Abe to disclose stimulus details

Japanese PM Abe is scheduled to disclose the details of the fiscal stimulus plan worth JPY 28 trillion as reported last week. However, sources say the plan involves actual spending worth just JPY 5-7 trillion.

However, Yen slide could be explained by the spike in the JGB yields. Japanese bonds suffered sharp losses in previous two sessions and may suffer more if the fiscal stimulus plan is seen worsening the fiscal deficit situation.

EUR/JPY Technical Levels

The cross was last seen trading around 114.70 levels. A break above 114.93 (38.2% of 109.205-118.464) would open doors for a rally to 115.80 (10-DMA) – 116.28 (23.6% of 109.205-118.464). On the lower side, a breakdown of support at 114.19 could yield a test of 113.83 (50% of 109.205-118.464). A violation there would expose 113.00 levels.