- EUR/JPY awaits fresh direction after the latest coronavirus updates suggest a pullback.
- The pair surged the previous day amid a broad Japanese yen weakness, risk reset.
- Headlines from China will be the key ahead of German GfK Consumer Confidence.
EUR/JPY steps back from multi-day high to 120.25 amid Thursday’s Asian session. The pair surged the previous day amid a mixed play of the broad US dollar strength and Japanese yen weakness while downbeat data from Europe failed to get noticed. Traders will now concentrate on coronavirus updates for the immediate direction ahead of the German data.
While it's not a high loss from the recent top, traders may trace the reasons to coronavirus updates from Hubei. The latest data suggest the death staying strong beyond the 2,000 mark while the infections registered a sharp decline based on the re-revised guidelines for classifications. The new methodology eliminates the category for cases clinically diagnosed with CT scans while counting only confirmed cases.
Also contributing to the pair’s step-back is China’s Global Times that suggests, “the actual number of overall infections in the city where the virus originated in December 2019 remained unknown. And despite over three weeks of city lockdown, the human-to-human transmission still continued and many patients could still not be treated in time, according to medical experts and observers.”
Even so, the US 10-year treasury yields add one basis point to the previous rise to 1.578% while S&P 500 Futures also follow the footsteps of Wall Street and increase 0.10% to 3,392 by the press time.
Be it the fear of the Japanese recession or China’s ability to placate traders, everything contributed towards making the Japanese yen the biggest loser among the G-10 currencies on Wednesday. The JPY weakness was strong enough to supersede Eurozone Current Account and Construction Output data.
Traders will now focus on the headlines from China ahead of German GfK Consumer Confidence Survey data for February. The sentiment gauge is expected to soften to 9.8% from 9.9% prior. Further on the economic calendar is Eurozone Producer Price Index (PPI) for January that is likely to declines to -0.4% from -0.2% previous readouts.
Technical Analysis
With a sustained break of a five-week-old falling trend line, at 119.70 now, EUR/JPY prices are likely to keep challenging the 200-day SMA level of 120.40 that holds the key to the monthly high close to 121.15.
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