EUR/JPY intermarket: the cross stopped in its tracks on Wall Street's sell-off

Ross J Burland FXStreet

Currently, EUR/JPY is trading at 121.10, up 0.19% on the day, having posted a daily high at 121.87 and low at 120.66.

Yesterday's rally has been erased with a tumble in stocks on Wall Street and the yen picking up the bid vs the dollar. USD/JPY dropped from high levels on the 112 handle to as low as 111.80 so far for a full cent of gains for the yen on the day.

USD/JPY drops below 112.00 as equity prices tumble in Wall Street

Despite Macron outperforming and Le Pen coming in joint last place in the Elabe poll, the cross is unable to hold the bid as bears play havoc on Wall Street. The S&P 500 is down 35 points on stops and has broken the March lows with financial and energy stocks fuelling the short side. EUR/JPY could be headed for a test of 120.50 on this move in stocks given the previous March lows and historic correlation to Wall Street's performance. Both the euro and yen are now consolidating the dollar's losses, but the break of 112 in USD/JPY was significant and a test of daily previous support at 111.50 could be more feasible than EUR/USD's attempts towards the 7th Dec highs of 1.0872. However, on the flip side, central bank monetary policy favours a bullish bias for the euro over the yen.

EUR/JPY levels

Analysts at Commerzbank explained that EUR/JPY has been easing back from its four-month resistance line at 122.77 and also the 2015-2017 downtrend. "Below the 121.18 March 3 high lies the 120.02 March 8 low."

However, on a longer-term outlook, the analysts are more positive: "Above the 4-month downtrend lies another downtrend at 123.88 and the 124.08 December high. Where are we wrong? Only below the 118.25 recent low will negate our upside bias. Below here lies the 117.58 200 day ma and the 116.69/37 50% retracement."

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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