EUR/JPY stays under pressure amid broad risk-off, a hung parliament in Spain
|- EUR/JPY extends pullback from multi-month high as political pessimism in Spain joins broad risk aversion.
- Downbeat Japanese data, BOJ’s summary of opinions largely ignored.
- Eurozone Industrial Output to decorate economic calendar, trade/political headlines will be the key for near-term direction.
While a hung parliament in Spain will portray another political drama in the trouble Eurozone, broad risk aversion also plays its part to drag the EUR/JPY pair further downward. The quote drops to 120.20 by the press time of pre-European session on Monday.
Although the ruling Socialist party gained 120 out of 350 seats in the fourth election in the four years, the right-wing Vox was the cheered contestant as it doubled seats from 24 to 52 and turned out to be the third-largest Spanish party. However, the ruling party still lack majority and the hung parliament is likely to dominate the political framework in Spain for one more time. As a result, the Prime Minister (PM) Pedro Sanchez announced to call on other parties to break the political deadlock, as per Reuters.
Elsewhere, trade stalemate between the United States (US) and China keep disturbing risk sentiment while renewed protests in Hong Kong and the Iran-Iraq tussle add to the geopolitical risks.
Additionally, Japan’s downbeat readings of monthly Machinery Orders and sustained support to dovish monetary policy by the Bank of Japan’s (BOJ) Summary of Opinions seem to have been shrugged off by traders.
That said, the S&P500 Futures mark around 0.3% loss by the time of writing whereas most Asian stocks are also keeping the red.
Looking forward, investors will keep an eye over Spanish/Hong Kong politics and trade headlines while also observing Eurozone Industrial Output for September for intermediate moves.
Technical Analysis
Even if 120.00 can be considering as immediate key support, sellers will look for fresh entry below 100-day Simple Moving Average (SMA) level of 119.30 during further declines. Alternatively, an upside clearance of 21-day SMA level of 120.67 could push buyers to challenge October month high near 121.50.
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