EUR/JPY clings to daily gains around 129.00

EUR/JPY breaks below 129.00 to new 4-month lows.
The risk aversion sentiment deflates somewhat on Tuesday.
US housing data next on tap in the calendar.

Pablo Piovano FXStreet

EUR/JPY bounces off lows in the 128.90/85 band on turnaround Tuesday.

EUR/JPY stays capped by the 129.50 area

The weekly downside in EUR/JPY seems to have met decent contention in the 128.90/85 band so far.

In fact, the prevailing risk aversion now looks subsided and allows a mild recovery in the risk complex, helping the cross to regain some oxygen around the 129.00 neighbourhood.

Renewed coronavirus fears have been sustaining the inflows into the safe haven universe in past sessions, underpinning at the same time the momentum in the Japanese yen and the dollar, while keeping yields depressed.

Furthermore, the current oversold condition of the cross - as per the daily RSI - could spark a near-term technical rebound, although chances of a visit to the 200-day SMA, today at 128.35, remain high.

Earlier in the session, German Producer Prices surpassed consensus in June, rising 1.3% MoM and 8.5% YoY. In addition, the Current Account surplus in Euroland narrowed to €4.3 billion during May. In the US, the focus of attention will be on the housing sector in light of the releases of Building Permits and Housing Starts,

EUR/JPY relevant levels

So far, the cross is gaining 0.07% at 129.07 and a surpass of 130.00 (psychological level) would expose 131.08 (weekly high Jul.13) and then 132.43 (monthly high Jul.1). On the downside, immediate support is located at 128.87 (monthly low Jul.20) seconded by 128.54 (61.8% Fibo of the January-June rally) and finally 128.35 (200-day SMA).

Author

Pablo Piovano

FXStreet

Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.

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