- The cross loses momentum and drops below 123.00.
- The demand for the Japanese yen picks up pace.
- US-China trade concerns keep ruling markets’ sentiment.
The now better tone around the Japanese safe haven has forced EUR/JPY to recede from daily highs and return to sub-123.00 levels.
EUR/JPY keeps looking to trade, data
Yesterday’s rebound in the cross has faltered ahead of the key 10-day SMA in the 123.40/45 band, although it managed to close with gains for the day.
However, the Japanese Yen has regained some poise today and forced the cross to give away initial gains and return to the area below 123.00 the figure, where it is now attempting to consolidate.
In the data space, flash German GDP figures for the first quarter came in on the soft side earlier in the session, adding to Tuesday’s poor prints from the ZEW survey and sponsoring fresh weakness in the single currency.
Later in the session, advanced EMU Q1 GDP figures are next of note in Euroland ahead of the slew of data releases in the US economy.
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 gaining 0.01% at 122.80 and faces initial resistance at 123.43 (10-day SMA) followed by 124.40 (21-day SMA) and finally 125.23 (monthly high May 1). 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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