EUR/JPY dives to fresh multi-month lows, around 122.00 mark ahead of ECB

• A combination of factors continued exerting pressure on EUR/JPY for the fourth straight day.
• Concerns about the ever-increasing COVID-19 cases continued benefitting the safe-haven JPY.
• Fresh restriction in Europe, dovish ECB expectations further took its toll on the shared currency.

A sudden pickup in the demand for the safe-haven Japanese yen dragged the EUR/JPY cross to the lowest level since mid-July, with bears now eyeing a sustained break below the 122.00 mark.

The cross prolonged this week's retracement slide from the 124.20 region and witnessed some follow-through selling for the fourth consecutive session on Thursday. Despite a modest rebound in the equity markets, concerns about the potential economic impact of the ever-increasing coronavirus cases continued lending some support to the JPY's safe-haven status.

On the other hand, the imposition of fresh COVID-19 restriction in the Eurozone's two largest economies – Germany and France – fueled worries that economic growth will weaken once again. This, in turn, increased prospects for further policy easing by the European Central Bank (ECB), which took its toll on the shared currency and further weighed on the EUR/JPY cross.

Hence, the key focus will be on the latest ECB monetary policy update, scheduled to be announced later this Thursday. The ECB is widely expected to maintain status-quo and lay the ground for further easing in December. This, along with a dovish outlook for the region's economy would intensify the bearish pressure surrounding the EUR/JPY cross and pave the way for additional weakness.

Technical levels to watch