Forex: EUR/JPY jitters on EU Parliament

FXstreet.com (Barcelona) - The discussion over whether the Cyprus bailout is or not a template for future situations in the Eurozone is causing some volatility in the Euro, also affecting the EUR/JPY. The cross dropped to 120.77 low and quickly jumped to 121.52 during the US session after a EU Parliament official being in favor of pushing large depositors to face bail-ins.

Markets have been digesting EU’s Dijsselbloem comments that uninsured deposits should contribute to bank rescue before taxpayers. ECB’s Couere replied to Dijsselbloem during the European morning, rejecting the idea that the Cyprus bailout is a new model for Europe, adding that there’s no reason to think French banks have the same problem as Cyprus. Also, he indicated that the troubles in Cyprus only show the need for ECB to be independent supervisor of banks in Europe.

UBS analysts are neutral: “Yesterday's sell-off ended the recent sideways trading, suggesting extension of the broader correction phase”, wrote analyst Gareth Berry, pointing to support at 118.73 and resistance at 124.50.