EUR/JPY: Bulls take back control on 120 handle despite poor turnout in European markets
|- EUR/JPY clings onto the 120 handle in the recovery of Nov lows.
- Markets take the HK bills signing in their stride in holiday thin markets.
EUR/JPY has been inching higher in an illiquid market place due to the Thanksgiving holidays and is up around 0.09% at the time of writing having travelled from a low of 120.32 to a high of 120.58. The main themes have stayed with the trade deal progress, or there lack of. Yesterday, Trump signed the Hong Kong Human Rights Democracy Act, and China was vocal, although did not offer details on possible retaliation.
China's Foreign Ministry came with the following comments:
- Severely meddles with China’s internal affairs.
- Severely violates international law.
- Opposes US law on Hong Kong.US attempts to move in on Chinese affairs are doomed to fail.
- The Act seriously interferes in the internal affairs of China violating international laws and basic principles of foreign relations.
- China will take firm countermeasures if the US continues in this way.
- US will have to shoulder all consequences if it continues this way.
EUR/JPY edges higher despite weakness in European stocks
Consequently, Asian shares were on the back foot and the Nikkei opened some 0.50% lower. Eurostoxx futures were -0.2% in early European trading. European stocks closed mainly in the red, but there was less than what might have been expected in the way of supply considering the implications of possible negative ramifications.
However, markets are taking the news in their stride, so far and the consensus is that there will not be a major threat to an inking-up of a phase-one deal before the next round of tariffs is due to kick in on 15th Dec – Hence, EUR/JPY has been able to continue with its northerly trajectory, extending the November recovery and basing on the 120 handle.
EUR/JPY levels
Analysts at Commerzbank explained that the EUR/JPY should find tougher resistance at 121.47/65. This is the location of the 200-day ma, the 50% Fibonacci retracement and the late October high.
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