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  • Renewed weakness in the single currency weighs on the cross.
  • The cross has tested 128.50 before sellers stepped in.
  • Italian politics, USD rally keep hurting the shared currency.

After a brief test of session tops in the mid-128.00s during the Asian trading hours, EUR/JPY has come under selling pressure and is now navigating daily lows in the 127.40 area.

EUR/JPY risks a test of Friday’s lows near 127.00

Auspicious news regarding Italy and released by Reuters over the weekend gave initial support to the European currency, although the bullish momentum ended up being ephemeral and the cross is now giving away those earlier gains.

In fact, the political scenario in Italy has now deteriorated further following the resignation of the recently appointed PM G.Conte and increasing discrepancies between leaders of M5S, Lega Nord and the President S.Mattarella.

In the meantime, Italian politics and the USD-dynamics remain poised to be the exclusive drivers for the pair’s price action in the near/medium term. Data wise in Euroland, May’s advanced inflation figures in the bloc will be the salient event this week (Thursday).

EUR/JPY relevant levels

At the moment the cross is losing 0.10% at 127.30 facing the next support at 127.12 (2018 low May 25) seconded by 122.56 (low May 18 2017) and then 122.40 (low Jun.15 2017). On the upside, a breakout of 128.37 (high May 28) would open the door to 129.52 (10-day sma) and finally 130.15 (21-day sma).