EUR/JPY offered, breaks below 121.00 on ECB headlines

EUR/JPY trades on a weak note and breaches 121.00.
Increasing demand for JPY, EUR-selling weigh on the cross.
Trade jitters keep the sentiment under pressure.

Pablo Piovano FXStreet

The favourable mood around the Japanese safe haven plus news from the ECB is now dragging EUR/JPY to fresh lows in the 120.80 area.

EUR/JPY focused on trade concerns, risk trends

The cross picked up extra downside traction after latest news cited the ECB could be studying the potential revamp of the bank’s inflation target.

Recent comments by President Trump undermined the continuation of the US-China trade talks and reignited fears of a global slowdown. In fact, besides suggesting that there still ‘a long way to go’ for both countries, Trump hinted at the probability of extra tariffs on Chinese products worth over $300 billion.

The subsequent dip in US yields gave extra wings to the demand for the Japanese safe haven, in turn dragging the cross to the negative territory for the fifth session in a row.

Later in the NA session, the Philly Fed index, Initial Claims and speeches by FOMC’s Bostic and Williams should keep the attention on the buck.

EUR/JPY relevant levels

At the moment the cross is losing 0.30% at 120.80 and a breakdown of 120.78 (low Jul.18) would expose 119.33 (low Feb.7 2017) and finally 11.23 (monthly low Feb.24 2017). On the upside, the next resistance lines up at 121.83 (21-day SMA) seconded by 122.32 (high Jul.10) and then 123.35 (monthly high Jul.1).

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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