- EUR/JPY fades the initial spike to the 122.50 region.
- Markets are biased towards a risk-off mood.
- Chief J.Powell due to speak later in the day.
The prevailing risk-off mood in the global markets has given extra wings to the Japanese safe haven today, which has morphed into renewed downside pressure in EUR/JPY.
EUR/JPY meets support near 121.70
The cross came under a moderate selling pressure on Tuesday, reversing two consecutive positive sessions while meeting decent resistance in the mid-122.00s, all against the backdrop of increasing demand for the Japanese currency in response to heightened geopolitical concerns.
In fact, escalation in tensions between Iran and the US have increased in past hours after the White House announced extra sanctions against the country and, particularly, against the Supreme Leader Ali Khamenei, who stressed later that the diplomatic way with the US is now ‘dead’.
Also weighing on EUR, Italian politics are now back to the fore and is gyrating around the EU fiscal rules, as usual; and with no solution on sight, as usual.
Later in the day, investors will closely follow the speech by Fed’s Jerome Powell, as he discusses the US economic outlook and monetary policy.
EUR/JPY relevant levels
At the moment the cross is retreating 0.30% at 121.92 and a breakdown of 120.95 (low Jun.21) would expose 120.78 (low Jun.3) and then 120.54 (monthly low Jan.17 2017). On the other hand, immediate hurdle is located at 122.46 (high Jun.25) followed by 123.17 (high Jun.11) and then 123.75 (high May 21).
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