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  • EUR/JPY weaker, breaks below 118.00 and threatens 2019 lows.
  • Increasing JPY-buying dragging the cross lower.
  • Lower US yields is sponsoring the bid for JPY.

Following two sessions with gains, EUR/JPY has now come under renewed downside pressure and navigates weekly lows in the 117.80/75 band.

EUR/JPY looks to risk trends, Jackson Hole

The weekly upside in the cross remains well contained by the 10-day SMA – today in the 118.30 region – while renewed buying interest in the Japanese safe haven found support in declining US yields.

In fact, yields of the key US 10-year note have tumbled to fresh lows in the 1.56% area, some 6 bps lower than Monday’s spike and the subsequent steepening of the 2y-10y yield curve, which in turn helped to mitigate concerns stemming from the inversion of the yield curve.

Nothing in the docket looks interesting in the first half of the week and ahead of the FOMC minutes on Thursday and the speech by Fed’s J.Powell at the Jackson Hole Symposium on Friday.

Earlier in Germany, Producer Prices came in above expectations during July, rising at a monthly 0.1% and 1.1% over the last twelve months.

EUR/JPY relevant levels

At the moment the cross is losing 0.26% at 117.81 and a breach of 117.51 (2019 low Aug.12) would open the door to 114.85 (2017 low Apr.17) and finally 113.71 (monthly low Nov.9 2016). On the upside, the next resistance lines up at 119.24 (21-day SMA) followed by 119.87 (high Aug.6) and then 120.86 (55-day SMA).