EUR/JPY meets support around 121.00 ahead of Fed

• EUR/JPY moves within a narrow range around the 121.00 handle.
• EMU Core CPI came in short of expectations; Q2 GDP at 1.1% YoY.
• FOMC meeting expected to drive the sentiment later today.

The sidelined performance in both the Japanese safe haven and the European currency is prompting EUR/JPY to follow suit, exchanging up and downs around 121.00.

EUR/JPY focused on Fed

The cross recorded fresh weekly tops near 121.40 on Tuesday, coincident with the key 21-day SMA, which continues to act as a solid up barrier for the time being.

The demand for the Japanese currency has picked up further pace in past hours following the drop in yields of the US 10-year benchmark to sub-2.05% ahead of the key FOMC meeting due later.

In fact, all eyes are upon the Federal Reserve and the subsequent press conference by Chief Powell. It is worth recalling that market consensus sees the Fed reducing the interest rate by 25 bps (instead of 50 bps), although market chatter was also gyrating around a not-so-dovish message by the Committee today.

In the data space, EUR was in centre stage earlier in the session after German Retail Sales expanded more than forecasted in June and the unemployment rate remained steady at 5.0%. Further data in Euroland noted advanced July CPI at 1.1%, Core CPI at 0.9% and Q2 GDP at 0.2% QoQ.

EUR/JPY relevant levels

At the moment the cross is receding 0.06% at 121.04 and a breakdown of 120.05 (low Jul.25) would open the door to 118.82 (2019 low Jan.3) and then 118.23 (monthly low Feb.24 2017). On the upside, the initial hurdle aligns at 121.37 (high Jul.25) followed by 121.86 (55-day SMA) and finally 122.32 (high Jul.10).