- EUR/JPY clings to gains in the 121.70/80 band.
- Risk appetite trends look to Fed cuts, ECB easing, US earnings season.
- US NY Empire State index next of significance in the calendar.
The European currency has started the week on a firm note, helping EUR/JPY to recover some ground following Friday’s sharp sell-off to the 121.50 area.
EUR/JPY looks to risk trends, data
The cross is flirting with the 10-day and the 21-day SMAs in the 121.80/89 band, area coincident with the 200-hour SMA, where gains appear limited for the time being.
Earlier Chinese GDP figures showed the economy expanded at an annualized 6.2% during the April-June period, the weakest pace since 1990. Further out, trade figures offset the persistent weak domestic demand while Industrial production surprised to the upside amidst the somewhat positive impact of monetary and fiscal stimulus.
Moving forward, the US NY Empire State index is due later in the NA session. Looking at the broader picture, US-China trade dispute is expected to keep driving the sentiment among investors as well as prospects of Fed easing. The upcoming Q2 earnings season in the US is also expected to collaborate with the risk trends.
EUR/JPY relevant levels
At the moment the cross is up 0.06% at 121.66 and faces the next hurdle at 122.32 (high Jul.10) seconded by 122.45 (55-day SMA) and then 123.35 (monthly high Jul.1). On the flip side, a breakdown of 121.31 (low Jul.3) would expose 120.95 (low Jun.21) and finally 120.78 (low Jun.3).
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