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  • EUR/JPY tracks the S&P 500 futures higher despite fiscal impasse in the US. 
  • Sino-US tensions linger as both sides delay a review of their trade deal. 
  • Continued hardening of German yields could bode well for the EUR.

EUR/JPY advanced on Monday as broad risk-on tilt during the Asian trading hours weighed over the anti-risk Japanese yen. 

The pair jumped 20 pips to 126.42 but traded well within Friday’s range of 125.74 to 126.46. 

The S&P 500 futures gained over 0.40% despite lingering concerns over stalled coronavirus stimulus and Sino-US tensions. The two nations delayed a review of their Phase 1 trade deal initially scheduled for Saturday and have not announced a new date so far. 

In addition, Japan’s gross domestic product fell by a record 27.8% in the April-June period, data released early Monday showed. Even so, the futures ticked higher, signaling the potential for an extension of the three-week winning streak. Asian stocks, however, traded mixed as stocks in Japan fell by over 0.5%, while those in Shanghai gained nearly 2%. 

Chinese stocks drew bids as the National Development and Reform Commission of the People’s Republic of China said that it had approved more than 10 investment projects and signaled additional infrastructure investments. 

Looking ahead, the pair could continue to take cues from the action in the global equities and the Eurozone bond markets. The German 10-year yield gained over seven basis points last week to register its biggest weekly gain in two months, The yield may rise further on Monday, helping the EUR stay bid, as Germany’s financing needs are now reportedly higher than European Central Bank’s bond-buying program. 

Technical levels