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  • Absence of Japanese traders for the Golden week joins Spanish election result to pull the pair back from 124.00.
  • 50-day and 100-day SMA acts as strong upside resistance to break to justify recent recovery.

Having bounced off 124.00 round-figure, the EUR/JPY pair is currently trading near 124.60 during early Monday. While broad pullback of the USD and positive results of the Spanish general election might have pleased buyers, 50-day and 100-day SMA confluence seem acting as strong upside resistance.

The general election in Spain confirmed ruling socialist party PSOE (Partido Socialista Obrero Español) as the highest vote gainer. However, the present PM Pedro Sanchez’s party must manage 43 seats to form 165 seat alliances in the parliament. This is less likely to become a cause of concern for PSOE as another party (like Podemos) stand ready to support Spain’s choice.

The US Dollar (USD) is on its pullback since Friday as weaker consumer spending inside the strong US GDP got greenback sellers’ attention whereas overall risk-off pushed investors to prefer safe-havens over the USD.

On Monday, Japanese markets are closed for Showa Day and the holidays are likely to extend for one day or another for upcoming 10 days termed as a golden week.

However, changes in the risk sentiment can direct near-term moves of the Japanese Yen (JPY). 10-year US Treasury yields could be considered as a barometer to foresee JPY moves. The risk gauge was unchanged at 2.5% during the press time.

Given the absence of major catalysts from Japan, traders will observe today’s Eurozone business climate and consumer confidence data for fresh impulse. Forecasts suggest no change in consumer climate figure of -7.9 but weaker than previous 0.53 mark of 0.50 for business confidence.

Technical Analysis

A fortnight old descending trend-line stretched since April 17 acts as immediate resistance around 125.20 ahead of highlighting 50-day and 100-day simple moving average (SMA) confluence of 125.55/60.

Meanwhile, the downside break of 124.00 can avail March month lows near 123.60 as an intermediate halt during their southward trajectory to 123.00 and 122.60 rest-points.