EUR/JPY looks weaker and challenges 125.00

EUR/JPY accelerates the downside to the 125.00 area.
The bid tone in the dollar keeps the riskier assets depressed.
The Chinese economy expanded 2.3% in 2020, 2.6% QoQ in Q4.

Pablo Piovano FXStreet

Another day, another pullback in EUR/JPY. This time the cross approaches the 125.00 neighbourhood in a context where the greenback remains favoured.

EUR/JPY puts 125.00 to the test

EUR/JPY retreats for the seventh consecutive session at the beginning of the week, intensifying the rejection from YTD peaks near 127.50 recorded earlier in the month.

The continuation of the upside momentum around the US dollar keeps the risk complex under extra pressure despite positive data releases in China. In fact, the Chinese economy expanded 2.3% in 2020 and 2.6% inter-quarter in Q4, while Industrial Production and Retail Sales also showed auspicious performances in December from a year earlier.

The marginal activity in the global markets due to the US MLK Day holiday also plots against any serious recovery attempt in EUR/JPY, leaving the price action mostly a continuation of last Friday’s decline.

Nothing worth mentioning data wise in the docket on Monday. Later in the week, both the ECB and the BoJ will hold their monetary policy meetings on Thursday. Consensus among investors has practically priced in the continuation of the current accommodative stance from both central banks.

EUR/JPY relevant levels

At the moment the cross is losing 0.12% at 125.22 and a drop below 125.08 (2021 low Jan.18) would aim for 124.75 (100-day SMA) and finally 124.55 (50% Fibo of the November-January rally). On the flip side, the next hurdle is located at 127.49 (2021 high Jan.7) followed by 130.18 (monthly high Nov.7 2018) and then 133.13 (monthly high Sep.21 2018).

Author

Pablo Piovano

FXStreet

Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.

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