EUR/JPY challenges 7-month lows near 120.00

• EUR/JPY drops further and approaches 120.00.
• The selling mood in EUR remains unabated.
• US ISM Manufacturing coming up next on the docket.

The bearish note around the European currency in combination with some fresh demand for the Japanese safe haven is dragging EUR/JPY to fresh mutli-day lows in the 120.20 region.

EUR/JPY weaker post-Fed, looks to data

The cross is down for the third session in a row on Thursday, coming under further downside pressure in response to increasing weakness in EUR, particularly after the FOMC event yesterday.

EUR suffered the less-dovish-than-expected tone from the Committee, which decided to cut the FFTR by 25 bps, broadly in line with market expectations. However, the vote was not unanimous, as E.Rosengren (Boston Fed) and E.George (Kansas City Fed) favoured keeping rates on hold. In addition, at his press conference, Chief J.Powell talked down the probability of further cuts in the next months, signalling that the Fed will enter a ‘wait-and-see’ mode and turn more data-dependent.

Yields of the US 10-year note rebounded soon after the Fed announcement, favouring JPY selling, although the move was short-lived and left the cross exposed to the selling impetus.

Later in the NA session, risk-appetite trends will be put to the test in   light of the always-key ISM Manufacturing ahead of tomorrow’s Non-farm Payrolls for the month of July.

EUR/JPY relevant levels

At the moment the cross is receding 0.19% at 120.23 and a breakdown of 120.05 (low Jul.25) would open the door to 118.82 (2019 low Jan.3) and then 118.23 (monthly low Feb.24 2017). On the upside, the initial hurdle aligns at 121.23 (21-day SMA) seconded by 121.37 (high Jul.25) and finally 121.80 (55-day SMA).