- EUR/JPY dropped to fresh lows near 121.70.
- Poor German data releases weigh on the European currency.
- Offered bias in JPY sustains the bounce off lows.
The now increasing selling pressure around the Japanese safe haven is helping EUR/JPY to regain ground lost and bounce off the 121.75/70 band.
EUR/JPY bounces off 4-month lows
The cross has breached the critical support at 122.00 the figure for the first time since early January, although the down move appears to have met some decent support in the proximity of 121.70.
Disappointing results from the German docket so far this week has been undermining any bullish attempts in the shared currency, while the rebound in yields of the US 10-year note is now fuelling the offered bias around the JPY, thus supporting the squeeze higher.
It is worth noting that the generalized decline in global money markets forced the Japanese 10-year reference to fall below -0.10%, or new monthly lows. On the other side of the Pacific, yields of the key US 10-year benchmark receded to sub-2.23%, the lowest level since September 2017, where it is now trying to rebound from.
What to look for around JPY
The main driver behind the price action around the Japanese Yen is expected to come from the risk appetite trends and their effects on the safe haven flows. In this regard, the US-China trade concerns plus rising geopolitical fears from US-Iran friction and the potential slowdown in the global economy are seen sustaining the higher demand for JPY. On the soft side for JPY, although largely priced in by investors, the Bank of Japan remains strongly committed to its QQE programme.
EUR/JPY relevant levels
At the moment the cross is retreating 0.10% at 121.92 and a breach of 121.75 (low May 29) would aim for 120.54 (monthly low Jan.17 2017) and then 118.82 (2019 low Jan.3 ‘flash crash’). On the upside, the next resistance emerges at 122.63 (10-day SMA) followed by 123.11 (21-day SMA) and finally 123.75 (high May 21).
Share
