- EUR/JPY reversal from 116.85 high extends to two-day lows at 115.75.
- The euro loses ground as the yen firms up as market sentiment sours.
- Below 115.85, the pair might lose upside momentum – Credit Suisse.
The euro is losing strength against the Japanese yen as the pair’s reversal from Tuesday’s high at 116.85 extended below immediate support area, at 115.93/95. The pair has retreated to two-day lows at 115.70, with the yen outperforming its peers on a risk-averse market.
The euro recovery falters as market sentiment sours
EUR/JPY rally from 114.37 lows last week found resistance on Monday right ahead of 117.00, and the pair pulled back, to accelerate its reversal on Wednesday. The moderate optimism triggered by the plans to ease pandemic restrictions has been dampened by Fed Powell’s comments, warning about the possibility of a long coronavirus downturn in the US.
The prevailing risk-averse sentiment is weighing on the euro for the benefit of safe-haven assets like the yen or the US dollar. Against this backdrop, the euro has lost about 0.5% over the last two days, after a 1.6% rally on the previous three days.
EUR/JPY: Break below 115.84 would ease the upside bias – Credit Suisse
The FX analysis team at Credit Suisse see the rebound from 114.37 as a corrective reaction and set their focus on the 115.84/82 support level, “We see scope for a test of price resistance at 116.57/61 but we look for this to then try and cap for an attempt to turn lower again (…) Support is seen at 115.84/82 initially, below which can ease the immediate upside bias, but with a move below 115.08/03 needed to suggest the downtrend has resumed for a fall back to 114.38.”
EUR/JPY key levels to watch
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