EUR/JPY challenges daily highs around 121.60

  • EUR/JPY adds to Monday’s gains above the 121.00 mark.
  • The risk-on sentiment regain traction on turnaround Tuesday.
  • The European Commission revised lower its GDP forecast.

The selling bias in the Japanese safe haven plus the rebound in the single currency area now lifting EUR/JPY to the area of daily highs around 121.60.

EUR/JPY weekly upside capped near 122.00

EUR/JPY is up for the third session in a row on Tuesday, managing to keep the positive bias in response to the offered tone in the Japanese currency, particularly vs. the greenback.

In the meantime, markets’ mood continues to gyrate around the economic recovery and the unabated coronavirus pandemic, while the recent pick-up in infected cases seems to have triggered a bigger dose of caution among investors.

On the euro-side, German Industrial Production rebounded less than expected in May while the European Commission (EC) has revised lower its forecasts for the GDP. In fact, in its Summer 2020 Economic Forecast, the EC now sees a deeper contraction in the bloc during the second quarter, while predictions are for an annual contraction of 8.7% followed by a 6.1% rebound in 2021.

EUR/JPY relevant levels

At the moment the cross is advancing 0.17% at 121.57 and faces the next up barrier at 121.96 (weekly high Jul.6) seconded by 122.11 (high Jun.16) and finally 124.43 (2020 high Jun.5). On the other hand, a drop below 119.66 (200-day SMA) would expose 119.31 (monthly low Jun.22) and then 118.84 (100-day SMA).

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