- EUR/JPY bucks the trend and take’s off on yen weakness.
- All eyes on coronavirus and subsequent economic data.
EUR/JPY is bucking the trend in the euro crosses considering how weak the yen has been in the face of outright dollar strength. At the time of writing, EUR/JPY is trading at 120.10 and has travelled from a low of 118.55 to a high of 120.13.
The spike in EURJPY comes as USD/JPY shoots to the moon, right through the 110 handle and on to take on the 111.30s. The dollar is relentless with the DXY now testing 46-moth highs. More on that here: US Dollar Index Price Analysis: DXY unstoppable ahead of FOMC, trading near 45-month highs
Will we see a deterioration in data, or heightened risks pertaining to the virus?
However, while the coronavirus new cases have been falling, there is still plenty of uncertainty out there which could see the market substitute risk-on currencies for the yen. The technical outlook for USD/JPY is also dubious considering the bearish wedge formation and trendline resistance – more on this here: Coronavirus peaking? How will it impact the global economies and FX?
A deterioration in the US economic data may all that it would take to see the Federal Reserve turn dovish and the sentiment for the US dollar to flip. Considering how weak the eurozone economy is and how reluctant EU ministers are to add fiscal policy at this juncture, the euro could still be in for further downside which could see EUR/JPY on the back foot again.
Yesterday, the German ZEW index for February was the first data reading post the coronavirus hit and it disappointed, as expected. The ZEW Indicator of Economic Sentiment for Germany fell sharply in February down 18 points to 8.7 points. Assessment of the current situation also fell to -15.7 points – much more than expected. Markets will now look to Friday’s PMIs.
EUR/JPY levels
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