- The offered bias in EUR drags the cross lower.
- Risk-off sentiment supports the Japanese Yen.
- US-China trade concerns remain in centre stage.
The softer bias around the European currency plus the strong demand for the Yen are forcing EUR/JPY to test the area of daily lows in the 123.65/60 band.
EUR/JPY focused on trade talks
The cross has resumed the down trend on Tuesday following yesterday’s positive performance.
Rising effervescence around the US-China trade negotiations has given extra legs to the Japanese safe haven as of late, morphing into extra downside pressure in the cross, which is threatening yesterday’s fresh 4-month lows near 123.30.
In this regard, the JPY is expected to face further volatility as Chinese officials will meet their US counterparts later in the week in Washington to resume the trade talks.
In the data space, and also weighing on the European currency, German Factory Orders expanded at a monthly 0.6% during March, below initial forecasts.
EUR/JPY relevant levels
At the moment the cross is retreating 0.23% at 123.70 and a breach of 123.36 (low May 6) would aim for 122.39 (monthly low Jan.15 2017) and then 118.82 (2019 low Jan.3). On the flip side, initial hurdle emerges at 125.44 (55-day SMA) followed by 126.80 (high Apr.17) and finally 127.50 (2019 high Mar.1).
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