The single currency euro remained within its recent trading area against the Japanese yen on Monday, its progress capped by sentiments for a dovish European Central Bank meeting next week and after investors turned more bearish on the currency.

The market seems to have priced in an ECB rate cut of 10 basis points in September and another one in March next year. The meeting on July 25 may reinforce those expectations.

Japanese yen lost momentum over risk-on sentiment triggered by the neutral Chinese GDP data. Earlier today, China’s industrial production bounced in June from a 17-year low in May along with the retail sales figures which edged up around 9.8% from the previous year. Besides that, the Chinese GDP came out at 6.2%, maintaining 6% – 6.5% GDP figures.

On the technical front, EUR/JPY has violated the bullish channel on the 4-hour timeframe. The channel supported pair around 121.850 which is now working as a resistance.

Since the EUR/JPY pair is already out of the range, we may see pair heading deep down towards 121.00 support level. While a bullish breakout of 121.850 can lead the Japanese cross towards 122 and 122.250.

Good luck!