EURJPY Pushing Back to Highs Ahead of ECB

ECB In Focus This WeekEUR will be in focus this week with the October ECB meeting on Thursday the headline event for the week. While the bank is widely expected to hold rates unchanged, there is some likelihood that the bank retains hawkish signalling in its outlook, keeping the door open for a potential December hike dependent on the path of inflation ahead of the final meeting of the year. While the bank signalled last time around a willingness to hold rates at current levels, stickiness in inflation is still a big issue for Lagarde and the recent uptick in energy prices puts this is issue back in prime focus here.Lagarde On Watch Ahead of ThursdayThe single currency has performed better over the last week or so given the pullback we’ve seen in USD. A less hawkish set of comments from Fed chairman Powell last week has created some room for near-term USD weakness which is benefiting EUR here. Ahead of Thursday’s meeting, we have a slew of EZ data as well as comments from ECB’s Lagarde tomorrow which traders hope will give some insight into how the bank is likely to act on Thursday. Given the subdued near-term expectations, there are upside risks for EUR this week should the bank strike a more hawkish tone than traders are currently expecting.Technical ViewsEURJPYThe rally has stalled for now into a test of the 159.71 level with price since trading back under the bull channel lows. However, the correction found solid support into the 155 area and price is now trading back up to retest both the underside of the broken bull channel and the 159.71 level resistance. With momentum studies turning higher, focus is on a fresh breakout here. To the downside mid 155s the key support to watch. Interestingly, we have an active buy signal in the Signal Centre today set below market at 157.80, suggesting a preference to buy and dip from current levels.