EUR/JPY daily gains capped around the 125.00 mark

• EUR/JPY looks firm and test the 125.00 level, or daily peaks.
• The dollar now reverses the initial drop and weighs on the euro.
• EMU Producer Prices rose 0.7% MoM and dropped 3.7% YoY in June.

After briefly testing daily tops in the 125.00 area, EUR/JPY sparked a correction lower to the current 124.80 region, keeping modest gains for the day so far.

EUR/JPY looks to risk trends

EUR/JPY has reversed the negative start of the week and gained around a cent from Monday’s lows in the 124.00 zone.

The now pick-up in the sentiment around the greenback continues to put the European currency and the rest of the risk complex under pressure, in turn motivating the cross to abandon the upper end of the range.

In the meantime, the risk appetite trends continue to dictate the sentiment in the global markets, with the pandemic, the economic recovery and fresh US-China jitters (this time around the mobile app Tik-Tok) taking centre stage for the time being.

Data wise in the euro docket, Producer Prices in the broader euro region rose at a monthly 0.7% and contracted 3.7% on a year to June, both prints coming in above estimates.

Later in the NA session, the IBD/TIPP index is due seconded by Factory Orders for the month of June.

EUR/JPY relevant levels

At the moment the cross is gaining 0.13% at 124.78 and faces the next up barrier at 125.20 (2020 high Jul.31) followed by 126.80 (monthly high Apr.17 2019) and finally 127.50 (2019 high Mar.1). On the other hand, a breach of 122.87 (monthly high Jan.16) would expose 121.14 (monthly high Mar.25) and then 120.03 (200-day SMA).