- Risk tone improved on comments from the US and China.
- Higher lows highlight 123.60/70 resistance confluence for buyers.
EUR/JPY is on the bids near 122.90 before the European markets take over on Wednesday. While recent risk-on helped the pair to portray higher low formation, German GDP gains immediate attention of traders.
The US President Donald Trump managed to please global trade optimists on Tuesday as his tweets signaled brighter chances of a trade deal between the US and China despite the latest rift.
The positive sentiment was carried forward during today’s early Asian session after China’s President Xi Jinping also spoke positively for the global trade mechanism.
While receding trade risk seemed to have cut the Japanese Yen’s (JPY) safe-haven appeal, the Euro (EUR) remained mostly stronger ahead of the preliminary reading of first quarter (Q1) 2019 gross domestic product (GDP) from Germany.
Forecasts suggest +0.4% expansion against 0.0% prior for the QoQ figure and +0.7% mark for YoY mark versus +0.9% previous readout.
Technical Analysis
In addition to four-week-old descending trend-line, a horizontal area comprising March 28 low and high marked on May 10 highlights the importance of 123.60/70 resistance confluence. Should prices rally beyond 123.70, 124.30 and 100-day simple moving average (SMA) near 125.00 could appear on bulls’ radar.
Meanwhile, current month low near 122.50 is likely strong support to watch as a break of which could open the door for a fresh downturn towards 122.00 and 120.60 numbers to the south.
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