FxWirePro: Euro nosedives after dovish ECB taper, could extend drop further, good to short upticks in EUR/JPY

• Euro slumped across the board after ECB delivered a dovish taper.
   
• ECB's Draghi announced a QE taper but put off its next major decision (interest rate hike) until well into 2019.
   
• The ECB pledged to maintain current rates through the Summer of 2019 and included other dovish comments.
   
• EUR/JPY crashed from highs of 130.66 to close around 1.85% lower at 129.97.
   
• The major is trading a narrow range on the day, downside holding above 23.6% Fib.
   
• JPY remains weak after BoJ at its monetary policy meeting held rates at -10bps, while maintaining 10yr JGB yield target at 0.00%.
   
• The BoJ vote was 8 to 1, leaving its pledge to buy JGBs unchanged, so that its holdings increase at annual pace of around 80 trln yen.
   
• We expect weakness in the pair to extend further and recommend going short on upticks.
   
• Next major support lies at 126.69 (38.2% Fib of 109.205 to 137.506 rally). We see bearish invalidation only above 200-DMA.

Support levels - 127.56 (Aug 18, 2017 low), 127, 126.69 (38.2% Fib)

Resistance levels - 128.98 (21-EMA), 129.08 (5-DMA), 129.97 (55-EMA)

Recommendation: Good to go short on upticks around 128.10/30, SL: 129, TP: 127.60/ 127/ 126.70

FxWirePro Currency Strength Index: FxWirePro's Hourly EUR Spot Index was at -107.594 (Bearish), while Hourly JPY Spot Index was at 3.2712 (Neutral) at 0345 GMT. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex.