EUR/JPY bounces off lows near 120.20, looks to ECB, data

EUR/JPY remains well on the defensive today although it has managed to rebound from earlier lows in the 120.20 area.

EUR/JPY looks to yields, ECB

The cross has gathered extra downside momentum following the increasing selling pressure around the European currency, particularly exacerbated after preliminary manufacturing PMIs in the core euro area came in short of expectations once again.

In addition, JPY is deriving extra oxygen from declining US 10-year yields, which are now navigating the area of daily lows near 2.05%. Still around JPY, news agency Reuters said opinions on further easing at the next BoJ meeting are divided among members.

Next of relevance on the docket will be the ECB event on Thursday as well as the publication of the IFO indicator in Germany. It is worth recalling that consensus among traders sees the central bank likely to announce extra monetary stimulus tomorrow, keeping EUR under a cautious stance for the time being.

 EUR/JPY relevant levels

At the moment the cross is receding 0.17% at 120.48 and a breakdown of 120.20 (low Jul.24) would expose 119.33 (low Feb.8 2017) and then 118.82 (2019 low Jan.3). On the upside, the initial hurdle aligns at 121.63 (21-day SMA) seconded by 122.32 (high Jul.10) and then 123.35 (monthly high Jul.1).