EUR/JPY: bulls holding up in adversary, bearish bias leans to 126.66

• EUR/JPY has held off the broad downside in the euro following the ECB while USD/JPY flows buoy as risk sentiment improves.
• Wall Street extends rally, Nasdaq rises more than 3.5%

EUR/JPY has been on the backfoot since mid-September and has travelled in a bearish channel from the 133 handle and made a recent low of 127.50 on Wednesday's business on the back of a very poor display in global stocks. 

While the sentiment was somewhat improved on Thursday, following strong results from Twitter and Microsoft that contributed to a bounce in US equities, on the coattails of European bourses that also had a better day,  the markets remain unconvinced on a number of factors that have been weighing on sentiment, including Brexit progress, Italy, and trade wars which would continue weigh in the yen's favour. Coupled with the Draghi's own concerns over the same issues, the pair has both an economic and technical bearish bias. 

Economic picture has darkened

With regards to the ECB meeting, analysts at Nomura explained that, in short, all was as expected, although, there was, however, some acknowledgement in the press conference that the economic picture had darkened: ECB: acknowledgement in press conference that economic picture had darkened - Nomura

EUR/JPY levels

Analysts at Commerzbank explained that EUR/JPY remains on the defensive:

"EUR/JPY has eroded Fibo support at 128.04. The Elliott wave count continues to indicate that the move lower is corrective only however we losses towards the 78.6% retracement at 126.66. This is the last defence for the 124.91 low."