EUR/JPY drops to fresh 5-week lows, looks to 128.00
|- EUR/JPY sheds further ground and re-visit 128.30.
- China’s Evergrande fears of contagion dominate the mood.
- German Producer Prices came in above estimates in August.
The continuation of the buying pressure in the greenback puts the risk complex under extra pressure and drags EUR/JPY to the vicinity of the 128.00 mark.
EUR/JPY in multi-week lows
The sour sentiment in the risk complex remains well in place on Monday and it has been exacerbated further as of late in response to fears of contagion following the Evergrande issue in China.
Indeed, benchmark stock indices in the old continent navigate a “sea of red” at the beginning of the week, while gains in the dollar pushes the US Dollar Index (DXY) to fresh monthly highs near 93.50.
The better mood in the buck stays unchanged despite yields of the US 10-year note drop to lows in the 1.33% area on Monday, some 5 bps lower than last week’s highs past 1.38%.
In the domestic calendar, German Producer Prices rose 1.5% MoM in August and 12% from a year earlier, both prints coming in above consensus. Across the pond, the NAHB Index will be the sole release later. In japan, markets are closed due to the “Respect for the Aged Day” holiday.
EUR/JPY relevant levels
So far, the cross is down 0.47% at 128.27 and a surpass of 129.56 (200-day SMA) would aim for a move to 130.00 (psychological level) and then 130.74 (monthly high Sep.3). On the downside, the next support comes in at 128.24 (monthly low Sep.20) followed by 127.93 (monthly low August 19) and 125.85 (200-week SMA).
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