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  • EUR/JPY takes the bids as optimism surrounding US-China trade stretched previous risk-on sentiment.
  • German factory orders, De Guindos’ speech are in the spotlight.

With the renewed positive concerns surrounding the US-China trade relations and receding tensions in Hong Kong, EUR/JPY confronts 21-DMA as it trades near 117.50 heading into the European open on Thursday.

The pair previously witnessed an upside pressure after the European Central Bank’s (ECB) Nominated President Christine Lagarde left the door open for the fiscal measures to sneak in the road to the regional recovery. Adding to the momentum could be earlier news concerning receding political pessimism at the UK and not-so-dovish signals from the Fed policymakers.

Risk tone recently got a boost based on the Reuters’ report that the US and Chinese diplomats are positive towards restarting trade negotiations in October with prior consultations during mid-September. Further, the news that Hong Kong’s Chief Executive Official withdrew the much-criticized bill that led to multi-month old protests added strength into the risk-on momentum.

With Germany’s July month Factory Orders around the corner, investors will focus on the key detail from the European powerhouse while trade/political headlines could entertain markets then after.

Read: When are the German Factory Orders and how could they affect EUR/USD?

Additionally, speech by the European Central Bank’s (ECB) Vice President Luis De Guindos will also be closely observed for fresh directions.

Technical Analysis

Buyers are looking for a sustained break of the 21-day simple moving average (DMA), near 117.75, to escalate the recent run-up towards August 19 high around 118.50 and then head to 119.60/62 area comprising 50-DMA and August 13 top. Alternatively, 116.60 and latest low surrounding 115.86 should return to charts during the pullback.