EUR/JPY: eyes on global equities, European politics and key data/geo-political events

European data in Germany Factory Orders and Industrial Production on the cards this week ahead of nonfarm payrolls.
The weekend's political news is key driver to start the week.

Ross J Burland FXStreet

EUR/JPY has climbed in the Asian open at the start of July's business with a bid in the euro crosses as the morning went by despite the German political fall out as reported in the weekend press. EUR/JPY has scored a high of 129.35 from a low of 129.08.

The weekend's political news has the interior minister and Leader of the Christian Social Union, Merkel's coalition partner in government, Horst Seehofer, rejecting a migration deal that Angela Merkel negotiated at last week's Brussels summit. Thus, such a political crisis for Germany begs the questions as to Merkel's position ahead of German regional elections that will not be until October.

Germany's Economy Minister Altmaier suggested that the coalition is in a 'serious' condition, however, Seehofer's resignation is not yet a done deal and the euro was able to recover some lost ground in thin trade on Monday.

Key risks ahead

Meanwhile, stocks behaved positively on Wall Street for the last trading day of the month and Tokyo may follow suit, however, the 6th July is set for when Chinese tariffs kick in by the Trump administration, offering a potential catalyst for volatility. Before then, European data in Germany Factory Orders and Industrial Production for May (Thursday-Friday) will also be key events. Nonfarm payrolls are also due and have the potential to rick Wall Street one way or the other.

EUR/JPY levels

Analysts at Commerzbank explained, from a technical perspective, that they look for the market to remain on the defensive while below the 55-day ma and the 2018 downtrend line at 130.09:

"The risk remains that we will see a slide back to 125.75, the last defence for the 124.62 recent low. Below 124.62 there is scope for a slide to the 124.08 December 2016 high. Between here and the 50% retracement at 123.40 we expect to see some profit taking. Below here would target 120.10/00."

Author

Ross J Burland

FXStreet

Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.

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