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Forex: EUR/JPY finishes slightly lower after roller-coaster day

FXstreet.com (Barcelona) - The EUR/JPY finished the day down 35 pips at 127.90. However, the intra-day price action was a different story with the pair trading as high as 129.90, and as low as 127.50. The initial catalyst which helped the pair shoot higher appeared be the ECB Rate announcement. However, the pair quickly reversed gains after Mario Draghi’s press conference which was quick to follow the initial announcement.

Analysts at NAB Global Markets noted, “The European Central Bank cut the main refinancing rate by 25 basis points to 0.50% as expected overnight, but it was the prospect of further action that had the bigger impact on markets. President Draghi said the ECB would consider charging banks to park excess overnight cash with the ECB (currently the deposit rate is zero), and that a further cut in the main refi rate was possible. Draghi also said that the ECB would continue to allow stressed banks to access unlimited ECB liquidity until at least July 2014, a 1-year extension when previously the ECB had announced only 6-month extensions.”

From a technical perspective, the pair remains in neutral trend set up and is still forming a large "pennant" continuation pattern on the daily chart. This pattern has been forming since April 11th, and should resolve itself in the very near future. Keep an eye on 129.90 and 127.00 going forward as a close above or below these levels could help be a good hint at the next major move the pair will make in coming weeks.

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