- Upside in EUR/JPY capped by Tillerson's exit and fears of a trade war.
- Focus on Draghi speech and China's response to tariff talk.
EUR/JPY was solidly bid in the overnight trade but failed to take out 132.47 (38.2 percent Fibonacci retracement of 137.51-129.35) as Tillerson's exit and China tariff talk put a bid under the Japanese Yen.
US stocks dropped 0.68 percent President Donald Trump fired Tillerson after a series of public rifts over issues including North Korea and Russia. Further, Politico reported that Trump will likely roll out a package of tariffs targeting $30 billion a year in Chinese imports as soon as next week.
Consequently, the EUR/JPY trimmed gains, however, the previous day's close of 132.04 was the highest since Feb. 22.
As of writing, the currency pair is trading at 132.25. The BOJ minutes released in Asia offered little clues to the JPY pairs. Ahead in the day, the pair will likely be influenced by China's response to tariff talk. Also, common currency could find takers if ECB President Draghi sounds hawkish.
EUR/JPY Technical Levels
A convincing break above 132.47 (38.2% Fib) would open doors for 133.35 (100-day MA) and 133.60 (50-day MA). On the downside, a violation at 131.86 could yield a sell-off to 131.57 (200-day MA) and 131.25 (10-day MA).
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