EUR/JPY probes 50-day EMA amid fresh risk-on

• EUR/JPY benefits from the latest trade-positive news.
• Expected easing from the Bank of Japan (BOJ) also weighs on the Japanese Yen (JPY).
• Trade/political headlines will be the key for fresh direction amid the absence of major data/events.

With the upbeat statements from Chinese media lifting risk sentiment, the EUR/JPY pair rises to a fresh four-week high of 119.15, before stepping back to 119.10, heading into the European session open on Wednesday.

Tweet from the Editor-in-chief of Chinese and English editions of the Global Times recently boosted market’s risk tone while saying, “Based on what I know, China will introduce important measures to ease the negative impact of the trade war. The measures will benefit some companies from both China and the US.”

Following the news, the Japanese Yen (JPY) slipped across the board and the US 10-year treasury yield surged further beyond 1.72% while Asian equities also stretched early-day recovery.

On the other hand, the Euro remains strong against most major currencies ahead of this week’s key event, i.e. monetary policy meeting by the European Central Bank (ECB). Even if market expectations are high for an ultra-lose monetary policy announcement backed by quantitative easing measures, analysts at Goldman Sachs doubts the reaction while saying, “the package could easily disappoint in terms of its size, its timing “or even whether it happens at all.”

It should also be noted that investors anticipate additional boost to the Bank of Japan’s (BOJ) heavy-easy monetary policy during the next week and the same also weigh on the JPY.

With no major data/event up for publishing from either the Eurozone or Japan, except Spanish Industrial Output, investors will keep following trade/political headlines ahead of tomorrow’s ECB, one of the finals from Mario Draghi.

Technical Analysis

The 50-day exponential moving average (EMA), at 119.15, acts as near-term key resistances, a break of which could escalate the run-up to five-month-old falling trend-line near 119.95/120.00. Meanwhile, 118.35/40 and 117.80/75 seems to limit near-term declines of the quote.