- Trade tensions worsen towards more serious level.
- Data/speech from Germany could entertain momentum traders amid overall focus on the risk sentiment.
The threat of the US-China trade tussle to result in a more serious situation continues to haunt global investors off-late. The EUR/JPY pair, being no exception, seesaws near 122.00, the lowest since January 03 ahead of Europe open on Wednesday.
After the US President Donald Trump’s warning to increase tariffs on China, the dragon nation reverted back with the caution to limit rare earth metal supplies to the US.
Additionally, Chinese media kept turning red over the Trump administration’s behavior and signal that they are strong enough for retaliation.
Amid doubts over the peace between the world’s two largest economies, 10-year treasury yield from the US dropped further beneath October 2017 lows to 2.245%.
Worried investors didn’t praise the US Treasury report that refrained from putting China on currency manipulator list.
Looking forward, speech from German central bank President Jens Weidman and monthly unemployment change data will be in the spotlight for now.
Weidman is less expected to offer any policy guidelines during his “Prometheus and Epimetheus in the Digital Age” speech at the Bundesbank Payments Symposium whereas unemployment change may flash -8K figure for April compared to -12K prior.
Technical Analysis
Should sellers refrain from respecting oversold conditions of 14-day relative strength index (RSI), 120.60 and 120.00 could entertain bears trying to fill in early May gap of 2017 by targeting 118.00.
Alternatively, 122.50 and 123.10 limits the immediate upside of the quote, a break of which can please buyers with 123.80 and 50-day simple moving average (SMA) level of 124.40.
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