The latest data on price pressure in Eurozone disappointed the market participants, as the annual core inflation rate fell to 0.9% in October from 1.1% a month ago. This his matches the low from May. The low this year and last was 0.7%, while the cyclical low was 0.6%. The negative outlook for the data has clearly outpaced the growth estimates for the previous three months (0.6% quarter-on-quarter, consensus 0.5%), which should not be regarded as highly surprising due to the release of positive data from Germany, France, and Italy. After softer Spanish and German national reports, it was not surprising that the headline CPI eased to 1.4% from 1.5%.

The European Central Bank President Mario Draghi has warned of some near-term softness due to energy prices. The drop in core inflation will make it harder for ECB to justify the interest rate hikes because the inflation projection target has not been hit yet. The weakening of inflation explains the ECB's caution in moving away from the ultra-loosening attitude. The negative outcome of data saves only a solid Eurozone GDP growth. In the third quarter, the economy grew at a rate of 0.6% q/q, 0.1 percentage points faster than assumed. The dynamics for the second quarter was revised by 0.1 percentage point as well - up to 0.7%.

Let's now take a look at the EUR/JPY technical picture at the H4 time frame. The market bounced from the technical support at the level of 131.79 and now is trading in the middle of the narrow horizontal zone at the level of 132.59. The key level to the upside is still the 78% Fibo at the level of 134.41. The market conditions are neutral.