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  • EUR/JPY moves higher and approaches the key 127.00 mark.
  • The dollar’s sell-off props up the upbeat mood in the cross.
  • US ISM Manufacturing next of relevance in the NA session.

The increasing selling bias around the greenback is giving extra wings to the euro and pushes EUR/JPY to the area of new 2020 highs in the proximity of the 127.00 yardstick.

EUR/JPY now looks to data

EUR/JPY is advancing for the second consecutive session on Tuesday, prolonging the optimism seen at the beginning of the week and navigating levels close to 127.00 the figure, area last visited in March 2019.

In fact, the dollar remains well depressed, particularly following Powell’s speech and the Fed’s fresh Average Inflation Targeting (AIT) scheme, which is predicted to keep interest rates at current low levels for longer, removing further shine from the buck. The increased bearish note in the greenback has been benefiting the risk complex in past weeks and is expected to keep underpinning this mood at least in the near/medium-term.

On the Japanese side, and following PM S.Abe’s resignation, market consensus keeps pointing to Y.Suga as the next PM (to be most likely decided around 15th September), although it is still unclear whether early elections will be called soon.

In the docket, EMU’s flash inflation figures were out earlier in the European morning and see the headline CPI contracting 0.2% on a year to August and the Core CPI gaining 0.4% over the last twelve months.

Across the pond, the ISM Manufacturing will grab all the attention seconded by Markit’s final manufacturing PMI for the month of August.

EUR/JPY relevant levels

At the moment the cross is advancing 0.41% at 126.92 and faces the next resistance at 126.98 (2020 high Sep.1) followed by 127.50 (2019 high Mar.1) and finally 129.25 (monthly high Dec.2018). On the downside, a drop below 124.44 (weekly low Aug.21) would expose 124.28 (weekly low Aug.11) and finally 122.87 (monthly high Jan.16).

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