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Forex - EUR/JPY soars as ECB votes unanimously to leave rates unchanged

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Shutterstock photo - The euro shot up against the yen on Thursday after the European Central Bank's governing members voted unanimously to leave benchmark interest rates unchanged at 0.75%, fueling hopes better days may await the eurozone economy.

In U.S. trading on Thursday, EUR/JPY hit 116.88, up 1.80% and up from a low of 114.78 and off a high of 116.99.

The pair sought to test support at 113.56, Tuesday's low, and resistance at 115.56, the high from Jan. 6.

While many were expecting the ECB to leave rates unchanged, some had not ruled out a rate cut due to slumping economic indicators across the currency zone.

Others expected rates to hold at 0.75% but were expecting language from ECB President Mario Draghi to hint at possible loosening, which gave the pair room to soar after voting members agreed unanimously to leave policy untouched.

The euro saw added support when Draghi himself said he saw recovery gaining steam in a year and gave no real hints if a need for rate cuts may arise before then, which sent the single currency gaining.

Elsewhere in Europe, Spanish borrowing costs fell at a government bond auction.

Spain's Treasury sold EUR5.8 billion worth of debt, above the targeted amount of EUR5 billion, with the yield on five-year bonds down to 3.99% from 4.20% at an auction last week.

Elsewhere, Italy saw borrowing costs fall to their lowest levels since January 2010 at an auction of 12-month government bonds.

The yen, meanwhile, continued to come under pressure in wake of Japanese Prime Minister Shinzo Abe's calls to see the country's inflation target double to 2%.

Also in Japan, the country's index of leading economic indicators rose less than expected in November, official data showed on Thursday.

In a report, Cabinet Office said that Japan's index of leading economic indicators rose to a seasonally adjusted 91.9 in November from 92.8 in October, whose figure was revised up from 92.5.

Analysts had expected Japan's index of leading economic indicators to rise 93.1 in November.

The euro, meanwhile, was up against the pound and up against the Canadian dollar, with EUR/GBP trading up 0.62% at 0.8204 and EUR/CAD trading up 1.11% at 1.3047.

In the U.K., the Bank of England left its benchmark interest rate unchanged at 0.5% and made no changes to the size of its GBP375 billion asset purchase program Thursday in a widely anticipated decision.

On Friday, Japan will release official data on the current account, which is directly linked to currency demand. - offers an extensive set of professional tools for the Forex, Commodities, Futures and the Stock Market including real-time data streaming, a comprehensive economic calendar, as well as financial news and technical & fundamental analysis by in-house experts.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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