EUR/JPY eyeing 131.00 handle as US-China trade war ease
|- The US Secretary of the Treasury Steven Mnuchin said that the trade war between the US and China was “put on hold” launching risk-on market sentiment.
- The EUR/JPY is threatening to break above the 131.00 handle.
The EUR/JPY is trading at around 130.90 up 0.4% on Monday as the US Dollar and the risk off mood dominates trading on holiday muted activity in Europe.
In Europe EUR/JPY found an intraday low at 150.48 then rose almost 40 pips and is now consolidating in the 130.98 region close to the 100-period simple moving average on the 4-hour time-frame.
The yen is considered a safe-haven currency in times of market turmoil and the recent comments by Steven Mnuchin, US Secretary of the Treasury, eased yen demand across the board.
"We are putting the trade war on hold. Right now, we have agreed to put the tariffs on hold while we try to execute the framework," said Mnuchin over the weekend. "We came away with a very comprehensive framework agreement that needs to be implemented, but has lots of different aspects," he added on Monday.
The easing of trade war tensions between the US and China is seen as a positive for the global economy. Indeed, investors cheered the positive news and the major stock indices in Asia, Europe, and the US are ticking up on Monday’s trading.
On the other hand, investors are choosing to ignore the political situation in Italy where the two Eurosceptic parties, Five Star Movement and League are on track to form a government.
Banks will be closed in observance of Whit Monday in Europe and Canada therefore moves can be limited as there is less liquidity in the market.
EUR/JPY 4-hour chart
The market is trading above its 50 and 100-period simple moving averages (SMA) but below the 200-period SMA. The market is rather neutral with an upward momentum bias. Support is seen at 130.24 and 129.53 swing lows while resistances are seen at 131.14 swing high and at the 132.00 figure.
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