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  • EUR/JPY bulls seeking higher grounds are let down on yen strength and corrections in the greenback.
  • The coronavirus spread is back on the agenda for traders and investors of European markets. 

EUR/JPY is trading at 122.42 between a range of 122.21 and 123.18, having lost its footing in the 123.00 area as the euro gives back some ground and the US dollar attempts a recovery.

The US dollar has been thrown around with some hard landings on the way down as a Democratic Party victory is just about inevitable. 

Despite the results of various states are on their way to the courthouses, the protracted uncertainty scenario isn’t so scary after all and investors are moving back into equities, driving markets forward.

Pennsylvania is the biggest risk, but Biden is on track to win 306 electoral votes, according to analysts at TD Securities, which counteracts the contested playbook of the Republican Party. 

”Our Macro Strategy team highlights that while the recount and litigation threats may linger, it also appears that most of these results are taking us to a margin outside of material risk from those channels,” analysts at TD Securities explained. 

”In this case, the market is focusing on the positives leading to an election day relief rally across commodities —despite the Blue Wave fizzling into something more akin to a Blue Ripple.”

From US elections and back to COVID

Meanwhile, the spread of the coronavirus continues to be problematic for risk assets and, in particular, the euro considering much of Europe is now experiencing higher levels of COVID-19 than recorded in the spring. 

However, according to Euronews, ”data collected by the European Centre for Disease Prevention and Control, shows there were 88 daily COVID-19 deaths reported by France on October 16.

But at the peak in early April, the country was registering more than 1,000 fatalities over a 24-hour period.”

Nonetheless, the spread of the virus poses serious challenges for an economic recovery that still has a long way to go.

The lockdowns will hamstring bullish advances on the EUR/USD charts as investors search for yield elsewhere, if not just staying on the sidelines.  

Given the risks to the USD associated with a Blue victory, the yen may well be a preferred choice which leaves EUR/JPY vulnerable on rallies to fading.

EUR/JPY levels