- The cross bounces off Thursday’s low in the mid-122.00s.
- Investors remain focused on US-China trade talks.
- US inflation figures next of relevance in the docket.
The better mood around the shared currency is lending some support to EUR/JPY and pushed it to the 123.60/65 band during early trade.
EUR/JPY looks to trade for direction
After three consecutive daily pullbacks, including a new multi-month low in the 122.50 region seen yesterday, the cross has now managed to regain some composure and reclaim the key 123.00 mark and beyond.
In the meantime, the cross keeps looking to developments from the US-China trade dispute and the resumption of talks later today. In this regard, it is worth mentioning that the new round of recently announced tariffs on Chinese Products has kicked in today.
In the docket, all the looks will be upon the upcoming publication of US inflation figures for the month of April and subsequent Fedspeak.
What to look for around JPY
The main driver behind the price action around the Japanese Yen is expected to come from the risk appetite trends and their effects on the safe haven flows. In this regard, the US-China trade concerns and prospects of slowdown in the global economy are seen sustaining the higher demand for JPY on the back of increasing nervousness among investors. On the soft side for JPY, the Bank of Japan remains strongly committed to its QQE programme, which should limit the upside potential in the currency.
EUR/JPY relevant levels
At the moment the cross is up 0.20% at 123.32 and faces the next resistance at 124.06 (10-day SMA) followed by 125.30 (55-day SMA) and finally 126.80 (high Apr.17). On the other hand, a breach of 122.48 (low May 9) would aim for 122.39 (monthly low Jan.15 2017) and then 118.82 (2019 low Jan.3 ‘flash crash’).
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