EURJPY formed a double top pattern on its 1-hour chart, indicating that a reversal from its uptrend might follow. Price has yet to break below the neckline support around 130.20 to confirm this.

If that happens, the pair could slide by at least the same height as the chart pattern or around 50 pips.

The 100 SMA is above the 200 SMA to indicate that the path of least resistance is to the upside or that support is more likely to hold than to break. However, price has fallen below the 100 SMA as an early indication of bearish pressure. The 200 SMA is holding as support for now since it lines up with the neckline.

Stochastic is pulling higher from the oversold region to suggest that buyers might take over while sellers take a break. RSI also appears to be moving up to signal a return in bullish pressure. In that case, EURJPY might still revisit the highs around 130.75.

The ECB decision would likely determine where EURJPY is headed next, as traders are anticipating a big announcement on tapering plans. The PEPP is due to expire in a few months, so policymakers might be pressed to disclose how they plan on transitioning to their regular quantitative easing program afterwards.

Updated economic forecasts are also due today, and analysts are expecting an upgrade to inflation forecasts. If so, this could keep euro bulls hopeful that the central bank is looking to reduce stimulus soon.

Still, concerns about the pandemic could dampen any optimism, especially since business surveys have reflected another downturn recently. ECB officials might opt to defer their decision until their December statement, as several uncertainties remain.

In any case, expect additional volatility during the actual decision and the press conference scheduled to follow.