- The cross reverses yesterday’s pullback and regains 123.00 and beyond.
- Daily upside faltered ahead of the 10-day SMA near 123.60.
- EMU, Germany Economic Sentiment disappointed expectations.
The selling bias around the Japanese safe haven is sponsoring the up move in EUR/JPY to levels above the key 123.00 the figure, although losing some momentum near 123.40.
EUR/JPY keeps looking to trade
Sellers are hitting the Japanese safe haven in a context of somewhat mitigated jitters surrounding the US-China trade dispute.
It seems that the demand for the JPY receded after China announced retaliatory measures including tariffs on more than 5000 US products worth around $60 billion and starting as early as June 1.
Back to the EUR, disappointing results from the ZEW survey in both Germany and the euro bloc plus poor Industrial Production figures appear to have weighed on the sentiment surrounding the single currency
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 0.43% at 123.17 and faces initial resistance at 123.66 (10-day SMA) followed by 125.19 (55-day SMA) and finally 126.80 (high Apr.17). 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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