EUR gained ground against JPY recently which is viewed as a pullback towards the resistance area of 125.00-50. EUR has been weighed down by with the economic slowdown in the eurozone which is proved by mixed economic reports. So, EUR's rally is likely to be short-lived.

EUR is trading firmly lower amid the economic slowdown and worse economic data published recently. EUR is going to extend weakness if upcoming ECB events and economic reports do not meet expectations. This week the economic calendar does not contain macroeconomic events to support EURO gains over USD. The European Union won backing from the bloc's top court on Tuesday for its system to protect foreign companies that is essential for future trade agreements, but critics say unfairly favors multinationals.

Recently the eurozone provided a raft of upbeat economic data which helped EUR to rally for a while. However, it is unpredictable how long EUR could sustain a rally. Today the eurozone's M3 Money Supply report was published with an increase to 4.5% from the previous value of 4.3% which was expected to decrease to 4.2% and Private Loans contracted to 3.2% which was expected to be unchanged at 3.3%. Today the eurozone's Prelim GDP report was published with an increase to 0.4% from the previous value of 0.2% which was expected to be at 0.3% and Unemployment Rate dipped to 7.7% which was expected to be unchanged at 7.8%.

On the JPY side, this week Japan's markets are closed for public holidays. So, the economic calendar lacks reports from Japan. Following the policy meeting of the Bank of Japan, Governor Kuroda made optimistic comments in the domestic economy. JPY is expected to regain momentum after certain corrections along the way. BOJ decided to examine the uncertainties about the economic activity along with the effect of the scheduled consumption tax hike and planned to continue the QQE on a large scale. The extreme QQE might make the JPY weaker against all other major currencies.

The bank projected a strong labor market with consumer price index at below 2% target. The industrial production showed a weaker than expected reading which dropped from 1.4% to 0.7%. Retail sales increased at 1.0% while Core Consumer improved at 0.8%. Trade Balance came in at -0.18T when the forecast was -0.30T. Tomorrow, Japan's Flash Manufacturing PMI report is going to be published which is expected to be unchanged at 49.5.

To sum up, JPY is still the stronger currency in the pair whereas EUR is struggling with the mixed economic data. EUR is expected to extend weakness in the coming days. As the Japanese economy thrives further and the BOJ remains optimistic, it provides JPY with solid support.

Now let us look at the technical view. The price is currently being held by the resistance area of 125.00-50 from where as per preceding strong bearish trend, the price is expected to push lower towards 123.50 to 124.00 support area in the coming days. As the price remains below 125.50 area with a daily close, the pair is going to trade under the bearish bias.