EUR/JPY fumbling into the 128.00 handle as risk aversion boosts the Yen

The EUR/JPY is continuing Wednesday's steep decline as risk aversion knocks the Euro lower against the safe-haven Yen, and the pair is testing into the 128.00 handle for Thursday.

The Euro's economic slump that was supposed to just be a slight contraction in the first quarter is continuing to extend into the mid-year, and German GDP figures today at 06:00 GMT, which is expected to print a 2.3%, in-line with the previous figure.

The yen is receiving a healthy boost on the back of broad market fear following trade headlines this week. The US is seeking to impose stiff tariffs on imported vehicles using the familiar national security byline under Section 232, and US President Trump also poured water on market expectations of US-China relations this week after he voiced dissatisfaction with current trade negotiations, and China has so far refused to concede to Trump's explicit $200 billion reduction in the US-China trade deficit.

Japan's Leading Economic Index printed a miss today, dropping to 104.4, an unexpected contraction from the forecast 105.6, and the previous figure was also revised to 105.9.

EUR/JPY levels to watch

The pair is deeply off its recent action, and the EUR/JPY is currently chattering across soft support from the 128.00 major level; a further drop is going to face support from mid-2017's last consolidation point, far below at the 125.00 region. A turnaround from here will have bulls stretching for the last swing high at 133.00, with the year's high far above at 137.50.