EUR/JPY loses the grip and drops to lows near 117.30

EUR/JPY grinds lower and challenges daily lows near 117.30.
EUR weakness, JPY-buying behind the down move in the cross.
EMU CPI failed to surprise markets to the upside.

Pablo Piovano FXStreet

The selling mood keeps hurting the sentiment in the shared currency and is now forcing EUR/JPY to recede further ground and test daily lows in the 117.30 area.

EUR/JPY focused on data, trade

The cross is prolonging the multi-session consolidative theme so far today, reversing two consecutive daily advances and looking to stabilize after Monday’s bullish ‘outside day’.

EUR remains well on the defensive and keeps bullish attempts on the cross limited following poor results from the euro docket this week as well as dovish rhetoric from ECB board member O.Rhen, who reiterated the need for extra stimulus in the region.

On the JPY-side, extra selling mood turned up earlier in the day in response to somewhat increased optimism on the US-China trade front after officials said they will try to resume talks in the near term.

Data wise today, German Retail Sales contracted more than expected 2.1% during July, while headline CPI in Euroland is expected to rise 1.0% on a year to August. Core prices, instead, are seen a tad lower: 0.9% YoY.

EUR/JPY relevant levels

At the moment the cross is retreating 0.30% at 117.40 and a breakdown of 116.56 (2019 low Aug.26) would open the door to 114.85 (2017 low Apr.17) and finally 113.71 (monthly low Nov.9 2016). On the other hand, the next resistance is seen at 118.11 (21-day SMA) followed by 119.87 (high Aug.6) and then 120.18 (55-day SMA).

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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