EUR/JPY: Bulls step in at 21-hour MA despite likely Chinese retaliation

• EUR/JPY has found a bid at the 21-hour moving average despite the Nikkei leaking -0.70%.
• Trade is back to the fore with Trump's signing of the Hong Kong Bills into law. 
• China is warning of retaliation is the US continues in this way. 

EUR/JPY has been offered from a high of 120.58 to a low of 120.32 in the Asian session and has taken on the 21-hour moving average as a support level while markets digest the implications of the US actions. In early Asia, Trump signed the Hong Kong bills into law, amove which jeopardises headway between China and the US with respect to a so-called "phase-one" deal. There had been a slight knee-jerk reaction in risk-fx, supporting abid in the yen, but it is barely reflecting the possible ramifications of such a move by the US. 

Trump signs Hong Kong Human Rights Democracy Act into law

"The legislation, approved unanimously by the U.S. Senate and by all but one lawmaker in the House of Representatives last week, requires the State Department to certify, at least annually, that Hong Kong retains enough autonomy to justify favourable US trading terms that have helped it maintain its position as a world financial center. The law also threatens sanctions for human rights violations," – Reuters reported, adding, "Congress passed a second bill, which Trump also signed, banning the export to the Hong Kong police of crowd-control munitions, such as teargas, pepper spray, rubber bullets and stun guns.

“I signed these bills out of respect for President Xi, China, and the people of Hong Kong. They are being enacted in the hope that Leaders and Representatives of China and Hong Kong will be able to amicably settle their differences leading to long term peace and prosperity for all,” Trump said following the signing of the bills.

“The U.S. now has new and meaningful tools to deter further influence and interference from Beijing into Hong Kong’s internal affairs,” Republican Senator Marco Rubio said after applauding Trump’s decision.

The move has seen the Chinese Foreign Ministry voicing strong opposition to the signature of the Hong Kong Human Rights Democracy Act:

China reiterates its retaliation threat after Trump signs the Hong Kong Human Rights Democracy Act, but does not offer details on possible retaliation - China's Foreign Ministry

China's Foreign Ministry comments

• Severely meddles with China’s internal affairs.
• Severely violates international law.
• Opposes US law on Hong Kong.
• US attempts to move in on Chinese affairs are doomed to fail.
• The Act seriously interferes in the internal affairs of China violating international laws and basic principles of foreign relations.
• China will take firm countermeasures if the US continues in this way. 
• US will have to shoulder all consequences if it continues this way. 

• Hong Kong bill may face retaliation - GT (Waiting for the full market risk-off response)

EUR/JPY levels

The cross is supported at the 21-hour moving average and down just -0.06% on the session. Meanwhile, the pair is suppressed below the 200-day moving average supported by the 50-DMA.