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Forex: EUR/JPY erases gains after growth forecasts

After peaking at 123.76 high on the release of German IFO February survey, the EUR/JPY turned the other way around and started to erase its gains, sharpening the movement as EU Commission published its new growth forecast. The EUR/JPY now quotes around its opening price, at 123.80, flat on the day.

The European Commission report cut Germany 2013 GDP estimate to 0.5%. The EZ countries should grow 0.1% after contracting -0.3% in 2012. “Europe’s labor market is a serious concern,” warned Marco Buti, head of the commission’s economics department. “This has grave social consequences and will, if unemployment becomes structurally entrenched, also weigh on growth perspectives going forward.”

All three German IFO survey criteria came in higher than expected: Business Climate rose from 104.3 to 107.4 (consensus of 105.0); Current Assessment rose from 108.1 to 110.1 (consensus of 108.5); Expectations rose from 100.6 to 104.6 (consensus of 101.3). Earlier, German GDP figures confirmed the -0.6% quarterly contraction in Q4.

“The EUR/JPY is moving in a short-term declining channel. A key support is at 121.22”, wrote MIG Bank analyst Bijoy Kar, pointing to hourly resistances at 124.71 (21/02/2013 high) and 125.97 (14/02/2013 high).

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