EUR/JPY extends the up move beyond 122.00 on JPY-selling
|- EUR/JPY moves above the 122.00 mark.
- The selling bias around JPY gathers traction.
- US Powell talked down rate cuts on Tuesday.
Increased selling pressure around the Japanese safe haven is propelling EUR/JPY to fresh tops further north of 122.00 the figure on Wednesday.
EUR/JPY looks to US yields, risk trends
The cross is so far reversing Tuesday’s bearish ‘outside day’ on the back of the re-emergence of the selling interest in the Japanese currency, in turn fuelled by a moderate rebound in yields of the US 10-year reference.
The sentiment around the risk-associated space improved somewhat after Chief J.Powell removed tailwinds from the probability of rate cuts by the Federal Reserve in the very near term at his speech on Tuesday.
In addition, Powell reiterated that the case for lower rates gathered extra steam as of late, although the Committee should remain cautious before reacting to short-term issues, such as uncertainty stemming from US-China trade dispute and global slowdown.
Earlier in the day, another down tick in the GfK’s Consumer Sentiment for Germany added to the ongoing selling bias around the European currency.
Inflows and outflows to/from the Japanese safe haven remain the key barometer of markets' mood and emerges as the critical driver for the price action in the cross. In this context, any progress in the US-China protracted trade dispute at the G-20 event should boost the demand for riskier assets, rendering in a continuation of the up move to, initially the 123.00 handle and probably beyond.
EUR/JPY relevant levels
At the moment the cross is gaining 0.40% at 122.27 and faces the next hurdle at 122.46 (high Jun.25) followed by 123.17 (high Jun.11) and then 123.75 (high May 21). On the other hand, a breakdown of 120.95 (low Jun.21) would expose 120.78 (low Jun.3) and then 120.54 (monthly low Jan.17 2017).
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